Nonmonetary Exchange Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange. Exchange has commercial substance: If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows , then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value. Exchange lacks commercial substance: If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset. To determine: The fair value of the new parcel land, which is received by Company T.

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Answer 1

Question

Chapter 10, Problem 10.20E

(1)

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The fair value of the new parcel land, which is received by Company T.

(2)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, which has commercial substance.

(3)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, assumes that the exchange lacks commercial substance.

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Answer 2

Question

Chapter 10, Problem 10.20E

(1)

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The fair value of the new parcel land, which is received by Company T.

(2)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, which has commercial substance.

(3)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, assumes that the exchange lacks commercial substance.

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Answer 3

Question

Chapter 10, Problem 10.20E

(1)

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The fair value of the new parcel land, which is received by Company T.

(2)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, which has commercial substance.

(3)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, assumes that the exchange lacks commercial substance.

Expert Solution & Answer

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Answer 4

Question

Chapter 10, Problem 10.20E

(1)

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The fair value of the new parcel land, which is received by Company T.

(2)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, which has commercial substance.

(3)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, assumes that the exchange lacks commercial substance.

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Answer 5

Chapter 10, Problem 10.20E

(1)

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The fair value of the new parcel land, which is received by Company T.

(2)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, which has commercial substance.

(3)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, assumes that the exchange lacks commercial substance.

Answer 6

Chapter 10, Problem 10.20E

(1)

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The fair value of the new parcel land, which is received by Company T.

Answer 7

Chapter 10, Problem 10.20E

(1)

To determine

Nonmonetary Exchange

Exchange of non-monetary assets for another non-monetary asset is known as nonmonetary exchange.

Exchange has commercial substance:

If an exchange (Example: exchange of land for another non-monetary asset other than land) is likely to have a change in the future cash flows, then it is known as exchange has commercial substance. In this case, an exchange of non-monetary assets, which have commercial substance, is recorded at its fair value, and then resulted gain or loss must be recognized by determining the difference between the fair value and book value.

Exchange lacks commercial substance:

If an exchange (Example: exchange of land for another land) is expected that it will not change the future cash flows, then such exchange is known as exchange lacks commercial substance. In this case, an exchange lacks commercial substance; therefore new non-monetary asset would be value at the book value of the old non-monetary asset.

To determine: The fair value of the new parcel land, which is received by Company T.

Answer 8

(2)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, which has commercial substance.

Answer 9

(2)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, which has commercial substance.

Answer 10

(3)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, assumes that the exchange lacks commercial substance.

Answer 11

(3)

To determine

To prepare: The journal entry, to record the exchange of old land for new parcel land, assumes that the exchange lacks commercial substance.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 10 - Prob. 10.1Q Ch. 10 - Prob. 10.2Q Ch. 10 - Prob. 10.3Q Ch. 10 - Prob. 10.4Q Ch. 10 - Prob. 10.5Q Ch. 10 - Prob. 10.6Q Ch. 10 - When an asset is acquired and a note payable is...Ch. 10 - Explain how assets acquired in exchange for equity...Ch. 10 - Prob. 10.9Q Ch. 10 - Prob. 10.10Q

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To prepare: The journal entry, to record the exchange of old land for new parcel land, which has commercial substance.

To prepare: The journal entry, to record the exchange of old land for new parcel land, assumes that the exchange lacks commercial substance.

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