FAR 3.6 - Nonmonetary Transactions Flashcards

1
Q

Gains and losses are always recognized in exchanges having commercial substance and are computed as:

A

The difference between fair value and book value of the asset given up

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2
Q

How is the new asset received basis in a monetary exchange calculated?

A

The cash given up plus the fair value of asset given up

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3
Q

In exchanges lacking commercial substance and no boot is received, how is a gain recognized?

A

A gain is not recognized when no boot is received

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4
Q

In exchanges lacking commercial substance and boot is paid, how is a gain recognized?

A

If less than 25% of total consideration, no gain is recognized

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5
Q

In exchanges lacking commercial substance and boot is received, how is a gain recognized?

A

If boot received is less than 25% of the total consideration, proportion of gain is recognized
If boot received is greater than 25% of the total consideration, the entir gain is recognized

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6
Q

Whenever a non monetary asset is involuntarily converted to cash, the gain or loss is:

A

Recognized in full

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