FAR 3.6 - Nonmonetary Transactions

Question 1

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

Answer 1

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

Question 2

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

Answer 2

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

Question 3

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

Answer 3

A gain is not recognized when no boot is received

Question 4

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

Answer 4

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

Question 5

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

Answer 5

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

Question 6

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

Answer 6

Recognized in full