The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange has commercial substance is usually recorded atA) either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company.       B) the fair value of the asset received if it is equally reliable as the fair value of the asset given up.                                                                                     C) the fair value of the asset given up, and a gain or loss is recognized.         D) the fair value of the asset given up, and a gain but not a loss may be recognized.

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Asked Dec 8, 2019
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The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange has commercial substance is usually recorded at

A) either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company.       B) the fair value of the asset received if it is equally reliable as the fair value of the asset given up.                                                                                     C) the fair value of the asset given up, and a gain or loss is recognized.         D) the fair value of the asset given up, and a gain but not a loss may be recognized.

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Expert Answer

Step 1

Fair Value:

Fair value is the price settled and agreed by both buyer and seller, each of them acting in their own self-interest. So, fair value of security is the current market value, which is the price at which investor has to pay to buy the security in an active market. Fair value is generally decided by the market for most of the investments or assets.

Step 2

The cost of a nonmonetary asset Purchased in exchange for another nonmonetary asset when the exchange has commercial substance is ...

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