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What is a nonmonetary exchange?

Nonmonetary transactions are nonreciprocal transfers (transfer of assets or services to another individual or company). The fundamental concepts of nonmonetary transactions per U.S. Generally Accepted Accounting Principles (GAAP) are those transactions that either contain or lack commercial substance.

Generally, accounting for nonmonetary exchanges will be based on the assets fair market value. If the fair value is not determinable, the transferor of the asset should record a nonmonetary exchange that is based on the assets net book value. Fair market value should be deemed not determinable if major uncertainties exist regarding its realizability.


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