Accounting recognition should be given to some or all of the gain realized on a nonmonetary exchange of plant assets except where the assets exchanged are
A)similar and additional cash (less than 10%) is paid.
B)similar and additional cash (greater than 10%) is received.
C)dissimilar and additional cash (less than 10%) is paid.
D)dissimilar and additional cash (greater than 10%) is received.

Question

Quizplus · Accepted Answer

According to generally accepted accounting principles (GAAP), recognition of gain on a nonmonetary exchange of plant assets should be given only if the assets exchanged are dissimilar, or if they are similar but additional cash greater than 25% of the fair value of the assets given up is paid or received. Since option A indicates that additional cash received is less than 10%, recognition of gain on a nonmonetary exchange of plant assets should be given.

Accounting Recognition Should Be Given to Some or All of the Gain