This video explains how to account for exchanges of nonmonetary assets (such as one company swapping trucks with another company). The general rule is to record the asset received at its fair market value and book any gain or loss, unless one of three exceptions applies. The example presented in this video shows the accounting treatment for both firms in the situation where fair market value is used and a gain is recorded.

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12 Comments

  • Steven Smith
    Posted June 22, 2020 3:30 pm

    God I love you

  • Peter Mai
    Posted June 22, 2020 3:30 pm

    Thanks for the video Michael. I believe there is one small adjustment here. The rule is to record the asset received at the fair market value of the asset surrendered, unless the fair value of the asset received is more clearly determinable (ASC 845-10-30-1). In your illustration, they were both $4,250 so it did not make a difference. Would you agree? Thanks!

  • Lorraine Ming
    Posted June 22, 2020 3:30 pm

    Explaining these concepts in such simple terms is an invaluable skill, bravo !

  • A U
    Posted June 22, 2020 3:30 pm

    this channel is truly a lifesaver! I've watched your tutorials since I started taking accounting classes last year and I've gotten A's in the 3/4 classes I've taken so far! Hopefully I'll have 4/4 A's when I take my intermediate exam this Wednesday. Thank you so much, and greetings from CT!

  • jack
    Posted June 22, 2020 3:30 pm

    Excellent video

  • Reen Gord
    Posted June 22, 2020 3:30 pm

    Very helpful. Studying for FAR, this was easy to follow and understand. I'll be back to see more. Thank you!

  • akeila pierre
    Posted June 22, 2020 3:30 pm

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  • Victoria Prisock
    Posted June 22, 2020 3:30 pm

    Thank you! Your videos are so helpful!

  • Daniel Farr
    Posted June 22, 2020 3:30 pm

    Is it a little odd, both sides of the exchange have a gain? Or did I miss something?

  • checkHook93
    Posted June 22, 2020 3:30 pm

    these videos are great. Im going to subscribe.

  • Annabelle
    Posted June 22, 2020 3:30 pm

    thank you!

  • Ebey Masillamanie
    Posted June 22, 2020 3:30 pm

    Thanks for the video. I do not however understand how did you figure out $2000 to be the book value of food for Bonnie? because I do not see it mentioned in the question.

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