For a nonmonetary exchange of plant assets, accounting recognition should not be given to

a. a loss when the exchange has no commercial substance.

b. a gain when the exchange has commercial substance.

c. part of a gain when the exchange has no commercial substance and cash is paid (cash paid/received is less than 25% of the fair value of the exchange).

d. part of a gain when the exchange has no commercial substance and cash is received (cash paid or received is less than 25% of the fair value of the exchange).

Question

Business

Frankie

4 March, 02:37

For a nonmonetary exchange of plant assets, accounting recognition should not be given to

a. a loss when the exchange has no commercial substance.

b. a gain when the exchange has commercial substance.

c. part of a gain when the exchange has no commercial substance and cash is paid (cash paid/received is less than 25% of the fair value of the exchange).

d. part of a gain when the exchange has no commercial substance and cash is received (cash paid or received is less than 25% of the fair value of the exchange).

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Julia · Answer 1

Answer: The correct answer is "c. part of a gain when the exchange has no commercial substance and cash is paid (cash paid/received is less than 25% of the fair value of the exchange).".

Explanation: For a nonmonetary exchange of plant assets, accounting recognition should not be given to part of a gain when the exchange has no commercial substance and cash is paid (cash paid/received is less than 25% of the fair value of the exchange).