Which of the following would indicate a nonmonetary exchange has commercial substance: A. The fair value...

Which of the following would indicate a nonmonetary exchange has commercial substance:

A. The fair value of the asset received is significantly higher than the book value of the asset given up.

B. Cash was received in the exchange.

C. The expected cash flows associated with the asset involved in the exchange re significantly different.

D. Both A&C

Expert Solution

A business is said to have commercial substance when its future cash flows are expected to change due to number of transaction.It is also applicable when exchange of assets between the businesses occur as a transaction.But change in the cash flow takes place for the below reasons:

Risk - Increase in the risk for inbound cash flows will not occur, which will lead to a larger repayment amount. Higher interest percentage for the debt taken.

Timing - Change in the timing of cash inflows, a business agrees to a delay its payment in exchange for a larger amount as in a future date.

Amount : Its a vice-versa of the Timing attribute as and when we receive a due amount before the due date, due to which the business receives a smaller amount than the expected higher amount.

So, from the above description and the question asked we can conclude that both A & C(Option D) is correct.

ekkarill92 answered 4 months ago

An exchange has commercial substance only if ?

If a piece of DNA has the sequence: ATGCCG, which of the following would indicate a...

If a piece of DNA has the sequence: ATGCCG, which of the following would indicate a frameshift insertion mutation? ATGCCG ATGGCG TACGGC ATGAACCG

to know if a solid substance is pure, which of the following criteria would be the...

to know if a solid substance is pure, which of the following criteria would be the most appropriate? a. solubility b. lambda absortion in the U.V. c.absence of coloration in the compound d.the presence of only one stain when running it in chromatography TLC e. that it presents well formed crystals in the microscope

In each pair, indicate which substance has the stronger intermolecular forces and explain your reasoning: (a)...

In each pair, indicate which substance has the stronger intermolecular forces and explain your reasoning: (a) Ne, Ar; (b) NF3, BF3; (c) SiH4, GeH4; (d) NaF, HF.

Accounting standard AASB 13 Fair Value Measurement defines fair value as the price that would be...

Accounting standard AASB 13 Fair Value Measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between “market participants” at the measurement date. What are the strengths and weaknesses of fair value as compared with other measurement methods such as historical cost? Refer to the qualitative characteristics of financial information outlined in the conceptual framework in your response.

IFRS 13 Fair Value Measurement 1 Introduction Fair value is defined as the price that would...

IFRS 13 Fair Value Measurement 1 Introduction Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, also referred to as the willing buyer-willing seller principle. It is important to note that fair value is a market-based measurement and not an entity-specific measurement. This guidance paper expands on the concept of fair value, provides some theoretical information to...

which of the following would indicate the beginning of cytokinesisin plant cells

Which of the following are now reported at fair market value on the balance sheet and...

Which of the following are now reported at fair market value on the balance sheet and changes in such values are included in earnings (net income)? Trading securities Available for sale securities Securities held to maturity Both trading and available for sale securities Cash paid for inventory is computed under the direct method on the statement of cash flows by adding an increase in inventory to cost of goods sale deducting an increase in inventory to cost of goods sold...

A chemist has a substance which was either phenol or resorcinol. He puts the substance in...

A chemist has a substance which was either phenol or resorcinol. He puts the substance in a test tube, and puts the test tube in a beakar of boiling water. The substance melted. what was the substance and could you say whether the substance was pure or not

1. Which of the following is true of flexible exchange rates? a. Their value is tied...

1. Which of the following is true of flexible exchange rates? a. Their value is tied to gold b. most countries have used flexible exchange rates since the 70s c. they require constant central bank management d. they are the best form of exchange rate 2. In order to credibly defend a fixed currency central banks need U? a. full employment b. low inflation c. adequate reserves d. political independence 3. how might the central bank intervene in FX markets...

Question