The basic principle used to value an asset acquired in a nonmonetary exchange is to value it at:
A) Fair value of the asset(s) given up.
B) The book value of the asset given plus any cash or other monetary consideration received.
C) Fair value or book value, whichever is smaller.
D) Book value of the asset given.

Question

Quizplus · Accepted Answer

The basic principle used to value an asset acquired in a nonmonetary exchange is to value it at the fair value of the asset(s) given up. This principle aligns with the cost principle, which states that assets should be recorded at their cost of acquisition. In a nonmonetary exchange, the cost of acquisition is the fair value of the asset(s) given up, which is the value at which the exchanged assets could be sold in an arm's length transaction between unrelated parties.

The Basic Principle Used to Value an Asset Acquired in a Nonmonetary