Set 3 - FR Chapter 14 NMT

Question 1

ASPE - How are NMT’s value?

Answer 1

Fair value

Question 2

If fair value of both asset given up and asset given away are available, which is used? ASPE

Answer 2

Asset given up

Question 3

If fair value of both asset given up and asset given away are available, which is used? ASPE -

Answer 3

Asset given up IF THEY ARE AS RELIABLE. If not, take the most reliable.

Question 4

When is fair value not appropriate? How is it measured in these circumstances? ASPE -

Answer 4

if transaction lacks commercial substance
exchange of product/property held for sale in ordinary course of business for a product/property to be sold in same line of business
FV or neither asset received, nor given up are reliably measurable
transaction is a non-monetary, non-reciprocal transfer to owners
measured at carrying value of asset

Question 5

define commercial substance ASPE -

Answer 5

• configuration of the future cash flows of asset received differ from those of asset given up
• entity-specific value of asset received differs significantly from entity-specific value of asset given up

Question 6

What is used to measure FV? What if this is not available, what is used then?

Answer 6

Comparable market transactions. If not available, can still use FV when:

• variability in range of estimates is not significant.
• probabilities in range of estimates can be reasonably assessed to estimate FV.

Question 7

required disclosures ASPE -

Answer 7

nature of transaction
basis of measurement
amount
gains and losses if applicable

Question 8

partial payment with cash ASPE - fair value available

Answer 8

cash included in the FV of asset given up or received, same as pure NMT transaction

Question 9

partial payment with cash ASPE - measured at carrying value

Answer 9

entity paying cash measures NMT received at carrying amount of asset given up, plus FV of cash paid
entity receiving cash measures NMT at carrying amount of asset given up LESS FV of cash received. Gain recognized for excess of cash>carrying amount.

Question 10

IFRS difference

Answer 10

when revenue transactions take place, and fair value of both NMT’s known, use FV of ASSET RECEIVED, not GIVEN UP