Non Monetary Transactions Flashcards
Accounting for Non Monetary Transactions
based on the fair values (FV) of the assets involved.
Use Carrying Value, NOT Fair Value
if any of the following apply: 1) neither the FV of the assets received nor FV of the assets surrendered is reasonably determinable, or 2) the transaction is an exchange of a product or property held for sale in the ordinary course of business for a product or property to be sold in the same line of business to facilitate sales to customers, or 3) the exchange lacks commercial substance.
Purchasing Power Loss
in a period of rising general price levels from holding monetary assets.
Monetary Asset
money or a claim to receive a sum of money, the amount of which is fixed or determinable without reference to future prices of specific goods and services
Fair Value Accounting
The acquisition is recorded at the fair value of the asset surrendered or the fair value of the asset received, whichever is more clearly determinable, and gains or losses should be recognized.
Nonreciprocal Transfer
A transfer of a nonmonetary asset to a stockholder or to another entity in a nonreciprocal transfer should be recorded at the fair value of the asset transferred, and a gain or loss should be recognized on the disposition of the asset.
Exchange WITH Commercial Substance
at the fair value of the asset received or the asset given up, whichever is more clearly evident, and a gain or loss is recognized on the exchange.
Boot Received
The recipient of monetary consideration in an exchange measured based on the recorded amount recognizes recognizes a portion of the gain experienced. The amount of the gain recognized is based on the ratio of the monetary consideration to the total consideration received.
Exchange WITHOUT Commercial Substance
No gains, only losses, are recognized
