Non-Monetary Transactions Flashcards
What is a reciprocal transaction?
When there is an exchange of non-monetary assets
What are non-reciprocal assets?
These are when there is a one-sided transfer of non-monetary assets (in-kind dividends, donations of goods or services, liquidation of company assets)
How are asset exchanges or transfers that are non-monetary recorded?
They’re recorded at the Fair value of the assets given up or the fair value of the assets received.
What are the exceptions to the recording rules?
ASPE 3831.06 excludes transactions that:
- lack commercial substance
- exchange of similar products or that are held in ordinary activities in the same line of business
- fair value of neither asset received nor give up is measurable
- transaction is non-monetary and non-reciprocal transfer of assets
Exshell Munches on Non-Cucumbers
What happens to items and transactions that are exempt from the rule?
They’re measured at the carrying amount of the asset given up.
What is meant by commercial substance?
When the entity’s future cash flows are expected to change significantly. Either the configuration of the future cash flows are significantly different, or the entity-specific value of the asset received differs
What is meant by the configuration of cash flows?
The changes in risk, timing, or amount of future cash flows
What is meant by entity-specific values?
It is the value of the asset-based on how the entity plans to use it. For example, fair value vs present value of future land payments
What is meant in the Exshell?
ASPE excludes the measurement of fair value when the transaction is an exchange of a product / property held for sale in the ordinary course of business exchange.
What is the definition for when an asset can be reliability measured?
Variable in the range of reasonable fair value estimates is not significant, probabilities of the various estimates within the range can be reasonably assessed and used to estimate fair value.
What type of disclosure is required under ASPE?
Nature of the transactions basis of measurement amount related gains or losses Nemo Attacks Gary
How are partial monetary considerations applied?
Cash is included as part of the fair value of the asset give up or considered as part of the transaction.
For assets that do not meet the criteria, how are they measured?
They’re measured at the carrying amount of the asset given up, plus the fair value of the cash consideration.
If they’re the ones receiving the cash measure, then it is the carrying amount of the asset less the fair value of the cash received
What are IFRS differences?
Per IFRS 15.66, the vendor must account for the transaction at the fair value of the non-cash consideration received. (which is different as it is usually the fair value of the consideration given up).
If it is not available, then you must use the stand-alone selling price of the goods or service promised to the customer in exchange for the consideration.
