[jeff]

I’ve had a few requests for April/May Study Groups…March will be here before you know it.

In order to take an early April exam, you should begin studying…now. 🙂

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

doesn't this question make you so mad? I submitted it to homework help and got an answer and replied back “per your own book, you specifically state that if boot is PAID, no gain is to be recognized” and they never responded.

[NJPRU]

I googled it, the consensus is that the answer is a mistake. lol and that the same question was presented in the 2006 version of the software with 12k as the answer. lol

yayyyy

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[Anonymous]

Another thing I would want to know. Does the lacking commercial substance concept apply to monetary transactions or only non monetary?

[Guti]

NJPRU, I think the naswer is 150K as well.

What was the answer Amanda?

FAR-84
AUD-
REG-
BEC-

[Anonymous]

“The answer is 150,000- BV exchanged plus cash paid. No gain or loss recognized…I hate these kinds of questions “

[Guti]

anjanja, lacking commercial substance mean that your cash flow does not change is the future. Is like trading my Toyota Corola for a Honda Civic. I wont be able to resell the shiety civic for more cash in the future. But if I trade my Corola for a new boat, I should be able to get more cash out of the new boat, so in this my cahs flow would change in the future and it has commercial substance.

FAR-84
AUD-
REG-
BEC-

[Anonymous]

I mean could that truck exchange be in fact monetary transaction?

[NJPRU]

Anna – by defintion “commercial substance” basically means that the cash flows of said company would change.. so i would assume that would include monetary and why you would check to see if the boot was more than 25% of the total consideration received. both type of transactions would materially (possible) affect cash flows.

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[Anonymous]

I think you're supposed to assume on these questions that if the two items that are being exchanged are the same (a truck for a truck), it lacks commercial substance. If a truck was being exchanged for land, I believe you would assume commercial substance unless they state otherwise

[NJPRU]

Amanda, I like your take on it. 🙂

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[jrosen92770]

Amanda – You mentioned you would study IFRS. Are you just going to pull out Becker's appendix and review that?

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[Anonymous]

I think I'm going to read through that and then redo the IFRS questions on Becker and then CPAreviewforfree.com has like 35 IFRS questions that I'm going to do too. Whats your plan for IFRS review?

[Anonymous]

Would my corolla 2001 be the same as new lexus?

You know how dealerships want you to trade your old car, that's what I always think of when see these questions with trucks, and I don't really see how these two situations are different, maybe that's why it doesn't make sense to me

[Anonymous]

I wouldn't think that much into it for the CPA Exam. These questions are going to be pretty basic, so if the assets are the same= lacks commercial substance.

[Anonymous]

For anyone that is interested.

Solen Co. and Nolse Co. exchanged similar trucks with fair values in excess of carrying amounts. In addition, Solen paid Nolse to compensate for the difference in truck values and the transaction lacks commercial substance. As a consequence of the exchange, Solen recognizes

A A gain equal to the difference between the fair value and carrying amount of the truck given up.

B A loss determined by the proportion of cash paid to the total consideration.

C Neither a gain nor a loss.

D A gain determined by the proportion of cash paid to the total consideration.

C – This answer is correct. Per ASC Topic 845, exchanges that lack commercial substance are recorded at book value. Therefore, gains on these exchanges are recognized only to the extent that boot is received. Since no boot is received by Solen, neither a gain nor loss would be recognized.

[Author]

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