Question

How do firms measure the value of the shares issued in a​ non-monetary exchange?

A. ​Typically, firms do not measure the value of the shares issued in a​ non-monetary exchange. They are not required to report that value.

B. Firms measure the value of the shares issued in a​ non-monetary exchange at their market​ rate, plus a percentage markup determined by the issuing company.

C. The fair value of the shares issued is the cost of the goods and services received in​ exchange, less a discount determined by the recipient of the shares. D. The fair value of the shares issued is the cost of the goods and services received in exchange.​ Therefore, the corporation records the noncash assets or services at the fair value of the stock issued in the exchange.

Answer 1

D ) the fair value of shares issued is cost of goods and services received in exchange therefore the corporations records the non cash assets or services at fair value of the stock issued in the exchange…

Non monetary transaction are exchanges and non reciprocal transfer that involves little or no monetary assets or liabilities.while monetary assets are assets whose amounts are fixed in terms of units of currency ( ex.. cash , account receivable and note receivable). Non monetary assets are assets other than those mentioned assets examples are inventories, investment in common stock and property , plant and equipment etc…

Rule for non monetary transaction

The primary accounting issue in non monetary transaction is determination of amounts to assign to the non monetary assets transferred to or from the reporting entities..

The general rule is that accounting for non monetary transaction is based on fair values of the assets involved.

Especially ASC 820 appends guidance to ASC845 that provides that when one of the parties to a non monetary transaction could have elected to receive cash in lieu of the non monetary assets , the amount of cash that would have been received may be best evidence of fair value of the non monetary assets exchange..

ASC 820 left intact , however guidance in ASC845 that in general. The fair value of assets surrender should be used to value of exchange unless fair value of assets received is more clearly evident of fair value ..