Joined: 29 Dec 2009 Location: United States
Online Status: Offline Posts: 23
Posted: 14 Apr 2010 at 22:36 | IP Logged
How can we determine that an exchange lacks commercial sunstance or not.....Becker says one of the condition is when fair values are not determinable.....but I have read before that FV of the asset received is the FV of the asset give up plus any boot paid.....For all those using becker, pls see p-39 & pass key on p-37.....
Joined: 29 Dec 2009 Location: United States
Online Status: Offline Posts: 23
Posted: 15 Apr 2010 at 10:22 | IP Logged
Pls someone reply to this question. Insutructor on becker says that it lacks commercial substance bcoz FV of asset is not given but we know that FV recd = Fv given up.........
I think it lacks commercial substance because they are similar assets...Is it so??????
Joined: 27 Mar 2010
Online Status: Offline Posts: 152
Posted: 15 Apr 2010 at 12:34 | IP Logged
Commercial Substance means the the Cash Flows of the assets exchanged are different, then it has Commercial Substance.
Lacks Commercial Substances means that the Cash flows of the Assets exchanged are not different
In many multiple choice questions, they sometimes outright state "The exchange is determined to have/lack commercial substance."
I'd read the book more closely because commercial substance is a very easy, basic, straightforward definition. Searching for it on Google would have been easier than soliciting a response on here.
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Topic: Confused with Non-monetary exchange
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