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IAS 16 – Exchange of Assets

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IAS 16 – Exchange of Assets

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • January 17, 2018 at 10:32 am #430748
    esskaykay
    Member
    • Topics: 2
    • Replies: 1
    • ☆

    Hello Sir,

    The IAS in regard to the exchange says:

    “If an asset is acquired in exchange for another asset (whether similar or dissimilar in nature), the cost will be measured at the fair value unless (a) the exchange transaction lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable….. [IAS 16.24]”

    I’m confused, FV to be used should be of asset taken up, given up? What is the rule here?

    Will really appreciate your help on this.

    Thank you.

    January 19, 2018 at 9:29 pm #431394
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    The fair value is that of the asset that you’ve given up as that is what you are in effect paying with instead of it being cash given up. If we paid cash then that would normally be considered the fair value.

    Thanks

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