Gain+Loss+Notes - If there is no commercial substance: If...

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Summary of Gain and Loss Recognition 1. Compare the book value and fair value of the asset being given up. If the fair value is greater than the book value you may recognize a gain. If the book value is greater than the fair value you will recognize a loss. 2. Losses are always recognized. 3. Does the exchange have commercial substance? If yes, recognize the gain.
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Unformatted text preview: If there is no commercial substance: If no cash is involved, no gain will be recognized. If cash is given, no gain is recognized. If cash is received, part of the gain is recognized. Cash Received/Cash Received + Fair Value of Asset Received = % of gain to recognize If the % of gain to recognize > 25%, recognize entire gain....
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This note was uploaded on 03/02/2012 for the course AICS 3115 taught by Professor Lynnalmond during the Spring '11 term at Virginia Tech.

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