The Cost of a Nonmonetary Asset Acquired in Exchange for Another

question 62

Multiple Choice

The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset and the exchange has commercial substance is usually recorded at

• A)the fair value of the asset given up, and a gain or loss is recognized.
• B)the fair value of the asset given up, and a gain but not a loss may be recognized.
• C)the fair value of the asset received if it is equally reliable as the fair value of the asset given up.
• D)either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company.

---

Definitions:

Variable Overhead Efficiency Variance

The difference between actual and budgeted variable overhead costs, attributable to differences in productive efficiency.

Favorable

A term used in finance and accounting to describe a situation or variance that is better than expected or budgeted, often indicating profits or gains.

Labor Efficiency Variance

The difference between the actual labor hours used to produce a good or service and the standard labor hours expected to be used, measuring labor efficiency.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (or standard) variable overhead based on activity levels.