nonmonetary exchanges

Question 1

how to calculate gain

Answer 1

the gain or loss on the exchange is computed only with regard to the old asset. it is simply the difference between the old assets bv and its fv.

Question 2

put the new asset on your books at implied fv. what’s implied fv

Answer 2

cash given and asset given

Question 3

old asset: cost 60 ad 25 fv 32
cash paid 10
implied fv of new asset: 32+10=42
loss 35 bv-32 fv=3

Answer 3

new asset   42
ad                 25
loss              3
         old asset      60
          cash             10

Question 4

cash received 9
old asset bv 30, fv 37
fv or new asset is 37-9=28

Answer 4

new asset 28
cash 9
old asset 30
gain 7

Question 5

if fv is not know

Answer 5

no gain recorded. record asset at bv of old asset and cash received or paid.

Question 6

if lacks commercial substance and no cash is received recognize

if there is a gain and cash is received recognize

Answer 6

full loss
no gain

partial gain

Question 7

lack commercial substance

Answer 7

firm is in the same position economically and can’t recognize gain. not affected economically

Question 8

in order for a segment to be reportable it must meet one of 3 criteria.

must also report to chief operating officer

Answer 8

segment revenue is 10% or more of total revenue for all reported operating segments,

segment profit or loss is 10% or more of total profit for those segments reporting a profit, or 10% of total loss for those segments reporting a loss, whichever is greater in absolute amount, and

segment assets are 10% or more of total assets of all operating segments. Thus, each segment meets at least one of the three criteria.

Question 9

you can capitalize software once it has reached

Answer 9

technological feasibility-software is complete but not yet out on the market

Question 10

subsequent events

conditions that existed at the balance sheet date need to be

conditions that did not exist at bs date need to be

Answer 10

requires recognition in the financials

need to be only disclosure in the footnotes