exchange of assets

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    silentassassinor
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    what is the meaning of commercial substance in context of exchange of non monetary assets.


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    MikeLittle
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    give me a reference where I can find the context, please


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    silentassassinor
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    please check consolidation question GLOVE june 2007


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    MikeLittle
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    Ok, I’ve read the question and didn’t see the expression c”commercialsubstance” anywhere.

    So I read through it again ….. and it’s still not there.

    You’ll need to do better than that I’m afraid


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    silentassassinor
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    i have kaplan kit and they have mentioned it in the solution.

    ok then plz read cashflows question of dec2010. you’ll definitely find it there


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    MikeLittle
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    Ah! In the solution! You told me it was in the question.

    The fact that the exchange of assets transaction has commercial substance pushes us to treat the acquisition at fair value. I think if it were simply us exchanging an unused asset for a different unused asset, we wouldn’t then need to recognise the fair value of the asset acquired and the gain in the asset we have just given up in exchange

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