An exchange of plant assets has commercial substance if the future cash flows change as a result of the exchange.

Question

Quizplus · Accepted Answer

An exchange of plant assets has commercial substance if there is a significant change in the future cash flows of the business as a result of the exchange. This means that the new asset acquired or the change in the terms of the asset will affect the company's operations and financial position. If there is no change in the future cash flows, then the exchange would be considered to have no commercial substance.

An Exchange of Plant Assets Has Commercial Substance If the Future