ABC Inc.engages in a non-cash exchange with a third party whereby ABC Inc.issues common shares to the third party in exchange for some highly specialized Machinery & Equipment.The value of the shares issued was $15,000 while the appraised value of the Machinery & Equipment was $12,000.At what amount would this transaction be valued on ABC's books?

Question

Quizplus · Accepted Answer

Under IFRS, the transaction would be recorded at the fair value of the assets given up or the assets received, whichever is more clearly evident. In this case, since the fair value of the shares ($15,000) is more clearly evident than the fair value of the machinery and equipment, the transaction would be recorded at $15,000. Under ASPE, the transaction is recorded at the fair value of the asset given up or the asset received, but there is more flexibility to use the fair value of the asset received (the machinery and equipment) if it is more reliably measurable, which in this case is $12,000.

ABC IncEngages in a Non-Cash Exchange with a Third Party Whereby