In a non-monetary transaction, if both asset fair values can be determined reliably, which value is used to measure the asset received?

In a non-monetary transaction, if both asset fair values can be determined reliably, which value is used to measure the asset received?

• A. The fair value of the asset received
• B. The fair value of the asset given up
• C. The average of both fair values
• D. The higher of the two fair values

Answer: (B)

In a nonmonetary exchange, when you can reliably determine the fair values of both assets, you measure the asset received at the fair value of the asset given up. This provides an objective basis for the transaction by anchoring the measurement to the consideration actually transferred. Using the value of the asset given up keeps the exchange symmetrical and aligns with the principle that, in the absence of cash changing hands, the value received mirrors the value given. If there’s cash involved (boot), recognition may differ, but with no cash, the asset received is recorded at the asset given up’s fair value.

In a nonmonetary exchange, when you can reliably determine the fair values of both assets, you measure the asset received at the fair value of the asset given up. This provides an objective basis for the transaction by anchoring the measurement to the consideration actually transferred. Using the value of the asset given up keeps the exchange symmetrical and aligns with the principle that, in the absence of cash changing hands, the value received mirrors the value given. If there’s cash involved (boot), recognition may differ, but with no cash, the asset received is recorded at the asset given up’s fair value.