PAS 16 states that if an exchange transaction causes a significant change in cash flows, the transaction has commercial substance. In transactions of this type, at what amount should the entity record the asset received?

PAS 16 states that if an exchange transaction causes a significant change in cash flows, the transaction has commercial substance. In transactions of this type, at what amount should the entity record the asset received?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

100%

Book Value plus Boot

Book Value

Fair Value

inminsic value

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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