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The basic principle used to value an asset acquired in a nonmonetary exchange is to value it at: A) Fair value of the asset(s) given up. B) The book value of the asset given plus any cash or other monetary consideration received. C) Fair value or book value, whichever is smaller. D) Book value of the asset given.

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Answer: A) Fair value of the asset(s) given up.

Explanation:

Non-monetary exchange occurs when non-financial assets are exchanged in a transaction. Recording this transaction is based on the fair value of the assets exchanged and the recording is usually done in one of 3 ways being,

1. At the fair value of the asset transferred in exchange for it with a gain or loss on the exchange being recorded.

2. At the fair value of the asset received, if the fair value of this asset is more evident than the fair value of the asset transferred in exchange for it.

3. At the recorded amount of the surrendered asset, if no fair values are determinable or the transaction has no commercial substance.

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