Exchanges of plant assets that have commercial substance require any gain or loss on the transaction to be recognized.

Question

Quizplus · Accepted Answer

According to the generally accepted accounting principles (GAAP), exchanges of plant assets that have commercial substance require any gain or loss on the transaction to be recognized. If the exchange lacks commercial substance (meaning the future cash flows of the company are not expected to change significantly), the company would defer any gain or loss recognition until a future transaction with commercial substance occurs.

Exchanges of Plant Assets That Have Commercial Substance Require Any