Non Monetary Transactions

Question 1

Nonmonetary exchanges are generally recorded at?

When is gain or loss generally recognized?

What’s the exception?

Answer 1

Fair Value

Immediately

Fair value is not determinable
Exchange transaction to facilitate sales to customers
Exchange transaction that lacks commercial substance

Question 2

What Determines commercial Substance?

Answer 2

whether the entity’s future cash flows are expected to significantly change

Question 3

After a transaction of similar assets, any gain difference that doesn’t meet the criteria for commercial substances should be determined by

Answer 3

the ratio of cash received to total consideration

Question 4

A transfer of a nonmonetary asset to a stockholder or to another entity in a one sided transfer should be recorded at?

Answer 4

fair value of the asset transferred, and a gain or loss should be recognized on the disposition of the asset.

If BV > FV then loss is reduction of income

Question 5

If the exchange lacks commercial substance what is the result?

Answer 5

the asset is measured at its book value before the exchange.