BU387 Lecture 3: Exchange of Assets-slides
Document Summary
Monetary component is significant relative to fv of total consideration. A piece of land is acquired by issuing a ,000, non- interesting bearing note; A building is acquired for ,000 plus a truck; A car is disposed of for ,000 cash. Cost of acquired asset is fv of monetary assets given up. Gain/loss is recognized in income at disposal. Non-monetary assets are exchanged for other non- monetary assets with little or no cash or other monetary assets. Accounted for on the same basis as monetary exchange (i. e. fv) Exceptions: fv not determinable (suppliers; appraisal; bids of assets to be exchanged, exchange made to facilitate a sale, transaction lacks commercial substance. No significant change in expected cash flows or assets" specific value after exchange. The assets are different (e. g. , different function) The assets are similar, but a significant amount of money items is involved in the transaction.
