Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Fundamental Accounting Equation

Financial Accounting

1. Introduction to Accounting

Fundamental Accounting Equation

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Multiple Choice

The basic principle for valuing assets in a nonmonetary exchange is to value the asset received at:

the historical cost of the asset received

the book value of the asset given up

the fair value of the asset received

the lower of the fair value of the asset given up or received

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Verified step by step guidance

Understand the concept of nonmonetary exchanges: Nonmonetary exchanges occur when assets are exchanged without cash or monetary consideration. The valuation principle is based on fair value, which reflects the market value of the assets involved.

Identify the fair value principle: In most cases, the asset received in a nonmonetary exchange is valued at its fair value. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Consider exceptions to the fair value principle: If the fair value of the asset received cannot be determined, the fair value of the asset given up is used instead. This ensures that the transaction is recorded at a reliable and objective value.

Evaluate the lower of fair value rule: In some cases, the asset received is valued at the lower of the fair value of the asset given up or the fair value of the asset received. This conservative approach is used to avoid overstating asset values.

Apply the principle to the problem: Based on the options provided, the correct valuation method for the asset received in a nonmonetary exchange is the fair value of the asset received, unless specific exceptions apply.