[Anonymous]

If they don’t explicitly tell you whether the transaction has commercial substance in the question, how the heck do you know? I know the rules of non-monetary exchanges well enough but sometimes can’t figure out whether the transaction has commercial substance or not…Help!

[Anonymous]

anyone? 🙂

[Mike J]

I think in this case the exam may be testing your ability to identify which scenario is in play, by not stating it outright.

This explanation of when a nonmonetary exchange has commercial substance may help:

https://www.accountingtools.com/articles/what-is-commercial-substance.html

[Anonymous]

Exchanges Having Commercial Substance
• An exchange has commercial substance if the FCFs change as a result of the transaction. The change can be in the areas of:
3 ‘’RAT’’
R – Risk
A – Amount
T – Timing of CFs

[Author]

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