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    Jess Siazon
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    The document discusses the accounting treatment for nonmonetary exchanges. For a nonmonetary exchange to have commercial substance, it must involve an exchange of dissimilar assets or assets for dissimilar risks. If a transaction lacks commercial substance, no gain is recognized. The document provides an example where Solen Co. and Nolse Co. exchanged trucks, with Solen also paying cash to compensate for a difference in values. However, the exchange lacked commercial substance, so Solen recognizes neither a gain nor a loss from the transaction.

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    The document discusses the accounting treatment for nonmonetary exchanges. For a nonmonetary exchange to have commercial substance, it must involve an exchange of dissimilar assets or assets for dissimilar risks. If a transaction lacks commercial substance, no gain is recognized. The document provides an example where Solen Co. and Nolse Co. exchanged trucks, with Solen also paying cash to compensate for a difference in values. However, the exchange lacked commercial substance, so Solen recognizes neither a gain nor a loss from the transaction.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    17 views3 pages

    SEMIFINAL

    Uploaded by

    Jess Siazon
    The document discusses the accounting treatment for nonmonetary exchanges. For a nonmonetary exchange to have commercial substance, it must involve an exchange of dissimilar assets or assets for dissimilar risks. If a transaction lacks commercial substance, no gain is recognized. The document provides an example where Solen Co. and Nolse Co. exchanged trucks, with Solen also paying cash to compensate for a difference in values. However, the exchange lacked commercial substance, so Solen recognizes neither a gain nor a loss from the transaction.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    For purposes of nonmonetary exchanges, the configuration of cash flows includes what?

    The risk, timing, and amount of cash flows of the assets. When nonmonetary assets are
    exchanged with no monetary consideration involved: No gain is recognized if the transaction lacks
    commercial substance.

    Solen Co. and Nolse Co. exchanged trucks with fair values in excess of carrying amounts. In addition,
    Solen paid Nolse to compensate for the difference in truck values. The exchange lacks commercial
    substance. As a consequence of the exchange, Solen recognizes

    D. Neither a gain nor a loss. Solen has an implied gain given that the fair value of its asset
    exceeds its book value. But when there is no commercial substance, such gains are recognized only
    when cash is received. Solen paid cash on the exchange.
    Heaven co

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