Chapter 12
Exchange of non-monetary assets
exchange of non-monetary assets
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Non-monetary assets and monetary assets
Monetary assets: currency held by financial companies
and will be fixed or determinable amount of money
charged assets, including cash, bank deposits, accounts
receivable and notes receivable, and prepared to hold to
maturity bond investments.
Non-monetary assets: assets other than monetary assets
Exchange non-monetary assets
Non-monetary assets and monetary assets
 Monetary assets: currency held by financial
companies and will be fixed or determinable
amount of money charged assets, including
cash, bank deposits, accounts receivable and
notes receivable, and prepared to hold to
maturity bond investments.
 Non-monetary assets: assets other than
monetary assets
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Non-monetary assets do not involve
the following:
1. Other than the owner or the owner's nonmonetary non-reciprocal transfer of contingent
assets (business to business; reciprocal transfers)
 2,.Mergers, debt restructuring, issuance of shares
of non-monetary assets acquired
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Recognition and Measurement
Non-monetary assets and exchange gains and
losses to determine the cost of different
monetary assets.
 Solve two problems:
1.for the recorded value of assets determined?
2.whether the profit and loss for the assets?
 Two kinds of valuation basis:
1.fair value
2.book value
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Non-monetary assets, recognition and measurement are two
cases:
Fair value measurement basis: non-monetary asset swap both
of the following conditions shall be at fair value and the
related tax to be paid for the cost of assets, fair value and
book value of assets for the difference between profit or loss :
(1) the exchange has commercial substance; (2) exchange of
assets or the assets of the fair value can be reliably measured.
Book value measurement basis: does not have commercial
substance or the fair value of Or assets involved in the
exchange can not be reliably measured the exchange of nonmonetary assets should be in accordance with the book value
for the assets and be paid the relevant taxes and charges, as
for the cost of assets, premium regardless of whether they are
related, are not recognized gains and losses; the premium
received or paid as the cost for the assets to determine the
adjustment factor.
exchange
nonmonetary
assets
Asset
exchange
monetary
transactions
have
comme
rcial
substa
nce
fair value
can be
reliably
measured
fair value
can not be
reliably
measured
not have commercial
substance
See "income"
criterion
measured
at fair value
Measured at
book value
Fair value can be reliably
measured to determine
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The following circumstances, that the exchange of assets or exchange the assets at fair
value can be reliably measured:
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Exchange of assets or the assets in an active market, the market price should be
determined based on its fair value.
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Exchange of assets or the assets there is no active market, but the same or similar assets in
active markets, should be the same or similar contigent assets market price to determine
their fair value.
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Exchange of assets or the assets do not exist for the same or similar assets, comparable
market transactions, valuation techniques should be used to determine its fair value. The
changes in fair value estimate range is small, or changes in estimates of fair value range, a
variety of estimates used to determine the probability of fair value can be reasonably
certain, as the fair value can be reliably measured.
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Exchange of assets and fair value for the assets can be reliably measured are, should be in
exchange for the assets at fair value as determined for the cost basis of assets, but there is
conclusive evidence that the fair value for the assets, except more reliable.
Commercial real judge
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Enterprises should follow the requirements of substance over form to
determine whether non-monetary asset exchange has commercial
substance.
Non-monetary assets exchanged one of the following two conditions, as
has commercial substance:
Change into, for the assets in the future cash flow risk, time and amount of
significantly different.
Change in, the assets present value of expected future cash flows is
different from the difference and change into, change compared to the fair
value of the assets is significant.
Note: The exchange of asset classes and the relationship between
commercial real: a different asset class exchange has commercial
substance.
Related party relationships with commercial real relationship: the
existence of related party relationships may not have commercial
substance lead.
Accountant occupation judgment:
1 non-monetary assets judgment?
 2 exchange of non-monetary assets judgment?
 3 fair value to determine whether the judgment?
 4 commercial essence judgment?
 5 occupation judgment affects the profit
 6 occupation moral effect on profit
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The measurement of the fair
value accounting
To the fair value of the assets surrendered and premium determined swap in
asset value
The fair value of the assets surrendered and the difference between the book
value of profit and loss.
Characteristics: rational, not be subject to tax adjustment.
Discuss the problem:
1.related taxes and exchanged inward-going assets? Or with the assets
surrendered? Whether they are to be paid?
Change asset related taxes and fees included in the asset transfer income;
exchanged inward-going assets related taxes and fees included in the relevant
asset value.
2.taxes: price, price. The tax levied on the fair value. Change to reflect the
output, change to obtain an invoice can reflect the input.
3.for the assets to pay the relevant taxes accounted for asset losses.
Related taxes
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1.stock: value-added tax, for the inventory to reflect the output
tax, input tax amount for restocking reflect. No VAT invoice
does not reflect the amount of input tax. For the inventory of the
output tax charged for the cost of assets, change into inventory
VAT separately reflected.
2. intangible assets: sales tax
3.fixed assets: real estate sales tax or personal property tax
4.the investment assets: stamp duty
5.the price of taxes: profit and loss account for the assets,
exchange of assets at cost.
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The determinationg of cost for the assets
(1) pay filling price on one side
Change asset value ( cost )
the fair value of the assets surrendered + pay
filling price + the relevant taxes and fees paid
the fair value of the assets received + the relevant
taxes and fees paid
(2) receives the boot party
Change asset value ( cost )
the fair value of the assets surrendered - Premium
+ the relevant taxes and fees paid
the fair value of the assets received + the relevant
taxes and fees paid
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The fair value of the assets surrendered and the
difference between the book value?
( 1) for the asset inventory; the investment real
estate shall be as sales, processing, to its fair value
and revenue recognition, at the same time carryover corresponding cost. Value added tax: the price
excluding tax
( 2) changing asset into fixed assets, intangible
assets, the assets surrendered fair value and the
difference between the book value, included in
operating income and business expenditure.
( 3) the assets surrendered for long-term equity
investment, available-for-sale financial assets, the
assets surrendered fair value and the difference
between the book value, included in investment
income.
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Further consideration:
If the fair value of the assets surrendered can be reliably
identified, should be how to determine the value of the
assets received?
If the change and the fair value of the assets received
can be reliably identified, should be how to determine
the value of the assets received?
If there is conclusive evidence of the fair value of the
assets received than the fair value of the assets
surrendered more reliable, should be how to determine
the cost of the assets received and the assets
surrendered should confirm the profit and loss?
The accounting book value
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1, in principle: in exchange for the assets book value
addition and subtraction to determine the premium for
the recorded value of assets
2 reasons: to prevent inflated profits
3, for the assets to pay the relevant taxes included for
the cost of assets.
4 Rating: simple; Unreasonable; Last resort; Not
allowed; Tax adjustments needed!
Does not confirm the loss for the assets to
determine the cost for the assets
 (1) the party to pay the premium
For the recorded value of assets (cost) = For +
book value of the assets to pay the premium
payment of related taxes
 (2) the party receiving the premium
For the recorded value of assets (cost) = Book
value for the assets - the premium payment of
related taxes
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A number of assets involved in the
exchange of non-monetary assets
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First determine the total recorded value, then at fair
value or book value ratio, assessed to determine the
specific asset value.
(1) non-monetary exchange has commercial substance
of assets, and swapped in and out of the fair value of
assets can be reliably measured, it should be changed
into in accordance with the fair value of the assets fair
value of assets accounted for the proportion of the total,
for the exchange of assets The total cost allocated to
determine the cost of the exchange of assets. To
determine the fair value of the total cost.
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(2) non-monetary exchange has commercial substance of
assets only for the fair value of assets can be reliably
measured, it should be changed into in accordance with the
fair value of assets the fair value of assets accounted for the
total proportion of the total cost for the assets to distribution.
To determine the fair value of the total cost.
(3) non-monetary exchange has commercial substance of
assets only for the fair value of the assets can be reliably
measured, it should be changed into in accordance with the
original book value of assets accounted for the original book
value of assets in proportion to the total allocation to
determine the fair value the total cost.
(4) non-monetary assets do not have commercial substance
only exchange for the assets fair value can be reliably
measured, it should be changed into in accordance with the
original book value of assets accounted for the original book
value of assets in proportion to the total allocation. Book
value determined by the total cost
Non-monetary assets exchanged information
disclosure
Change into, change out of asset classes
 Exchange method for determining the cost of
assets
 Change into, out of the assets for fair value and
book value for the assets
 Non-monetary asset exchange gains and losses
recognized
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Guidelines thinking
1.fair value and tax
2.the profit and loss for the assets
3. the relevant tax
4. tax policy
5. tax adjustments
6. to prevent the adjustment of profits