Your Ask Joey ™ Answer

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.


Back To All Questions

You might also be interested in...

  • Three Reasons to Become an Accountant

    If you’re someone who is intrigued by numbers, enjoys problem-solving and wants to help others, then accounting might be the perfect career for you. While some people may be put off by its unalluring reputation, accounting is an excellent career choice that has many benefits. In this article, we look at three of the reasons...

  • Qualified Retirement Planning: Tax Advantages & Disadvantages

    Home Advantages and Disadvantages of Tax-Free and Deferred-Tax Retirement Plans What are “qualified retirement plans” and how can they be effective for tax planning? Well, there are plenty of tax savings advantages to individuals contributing to tax-free retirement accounts, as well as tax-deferred retirement accounts. However, this doesn’t necessarily mean that there are no disadvantages...

  • CPA Evolution Survival Guide

    Download Your eBook by selecting the download icon in the top right-hand corner