Tag Archives: technical

Common CFE Terminology (or a CFE Dictionary)

With the Common Final Examination (CFE) still being new, the jargon will change so we’ll keep updating this with your suggestions. You’ll hear all kinds of terms thrown around this year. Here are the translations for those who aren’t familiar yet with the CFE terminology:

  • .. Case / Simulation / Exam– These are just all the same terms for a ‘CFE business case’. The UFE typically called these ‘simulations’ which is why you might hear the term still used but most of the official CFE material has gone back to using ‘case’. There are no differences between any of these terms.
  • Multis (multi-competency) are shorter cases which range from 45-90 minutes. They may test around 3-5 competencies at a time. During the CFE, these are written on Day 3. Multis are usually easier to write because they are shorter and easier to manage all the information. The time-crunch level of multis varies.
  • Comps– or Comprehensive cases are the large five hour cases. These are large cases with a lot of information and their own problems/strategies. On the CFE these are written on day one of the exam.
  • NA, NC, RC, C and CD – These are how you are marked on the CFE during days two and three. While each mark is attached a numeric value, your feedback will not include a final score and only a mark ranging from NA to CD. For more description, see here.
    • NA = Not Addressed
    • NC = Nominal Competence
    • RC = Reaching Competence
    • C = Competent
    • CD = Competent with Distinction
  • Assessment Opportunity (Indicator)– An assessment opportunity is a term for a competency being tested. You might hear it referred to as competency indicator as well which means the same thing. An assessment opportunity is a specific requirement within the case that you are required to respond to. So if you’re expected to do an audit planning memo, you would have an assurance indicator that required you to create an audit planning memo. If you’re expected to identify incorrect accounting treatments, you would have a financial accounting indicator that required this. You would then receive a mark of NA to CD for each indicator.
  • Depth– Depth means the amount of detail and meaningful, thorough discussion you have about a specific topic. A superficial discussion without a lot of detail is said to lack depth because you are not exploring enough sides of the issue or not being thorough enough in your discussion. In some contexts, you are also said not have enough depth if you level of discussion within an assessment opportunity is at the RC level (rather than C)
  • Breadth Breadth refers to getting across indicators or issues and talking less thoroughly. If you don’t have enough breadth, it means you are not talking about enough indicators or issues within a single indicator and focusing too much on a single indicator or issue.
  • SecureExam– The software in which the CFE is written. This is a secure, built in word processor, spreadsheet, and reference look up software. You’re advised to start using this as soon as it’s available as it is considered more cumbersome to use than Word and Excel.
  • RAMP-– This acronym stands for Risk, Approach, Materiality and Procedures:  a strategy to tackle audit planning memos.
  • Required – Refers to what you are expected to answer/discuss in the case. This will usually come in the form of somebody asking you to do something as part of the case. Each required is linked to an assessment opportunity.
  • Core (Technical) Competency – The abilities expected of CPA in practice which specifically include Financial Reporting (accounting), Strategy and Governance, Management Accounting, Audit and Assurance, Taxation and Finance.
  • Enabling Competency – The soft skills around being ethical, decision-making, problem-solving, communication, self-management and teamwork and leadership.
  • Integration – Integration is a reference to incorporating multiple elements, usually from multiple competencies, within your case response. It is a bigger-picture, higher-order view of the case with your response discussing how the different portions of the case inter-relate with a view of adding significantly more value in your response than in a competency-specific analysis only.
  • Technical – The term technical is in reference to skills and abilities you need within the core competencies such as financial accounting or management accounting. For example, you need to be able to understand and apply accounting rules from the CPA Handbook – this is a technical skill.
  • Level 1-4 – To pass the CFE you have two pass four separate levels. Learn more here.
  • UFE (Uniform Evaluation) – The quasi-predecessor to the CFE. The UFE was the 3-day case-based qualifying exam for the Chartered Accountant profession prior to 2016.
  • BOE (Board of Evaluators) – The BOE is responsible for setting the passing standards around the Common Final Examination (CFE) and then for ensuring that the standard is held to during examination creation and marking.
  • Short forms for Competencies:
    • FA – Financial accounting and reporting
    • MA – Management accounting
    • Tax – Anything in the taxation competency


Heard any other terms that confuse you? Let us know in the comments and we’ll keep updating the dictionary!

IAS 8 – Accounting policies, changes in accounting estimates and errors

Accounting policies, changes in accounting estimates and errors (IAS 8)
Last Updated: October 30, 2013

You can find a printer-friendly study sheet in PDF format by clicking here!

Selection and Application of Accounting Policies

  • If an IFRS specifically applies to a transaction the specific IFRS must be applied.
  • In the absence of specific guidance, management must use judgment which results in:
    • Relevant to the economic decision-making needs of users; and
    • Reliable, in that the financial statements:
      • Represent faithfully the financial position, performance and cash flows;
      • Reflect the economic substance of transactions and not just legal form;
      • Are free from bias;
      • Are prudent; and
      • Are complete in all material respects.

In the above judgments, management should refer to the following sources:

  1. IFRSs dealing with similar and related issues
  2. The definitions, recognition criteria and measurement concepts for assets, liabilities, income and expenses in the Framework.
  3. Could also consider the most recent pronouncements of other standard-setting bodies which use a similar conceptual framework or other accounting literature/accepted industry practices.

Other Notes

  • Entities should be consistent in their application of accounting policies for similar transactions.


Changes in Accounting Policies

Change in accounting policies is only permitted if:

  • Required by an IFRS; or
  • Results in equally reliable statements and more relevant information.

Changes in accounting policies must be applied retrospectively unless specific guidance is provided. The opening balance of each affected component of equity for the earliest prior period presented and other comparative amounts should be adjusted as if the policy was always in place.

Disclosures highlights: should include the nature of the change, reason for the change and amounts of the adjustment for each line item affected.

Changes in Accounting Estimates

The nature of accounting will result in occasional changes to accounting estimates, this is not the same as changes in accounting policies. When in doubt, IFRS requires you to assume it is a change in accounting estimate.

  • The effects of a change in accounting estimate shall be recognized prospectively by including it in profit or loss in:
    • The period of the change, if the change affects that period only; or
    • The period of the change and future periods, if the change affects both.
    • If the change in accounting estimate increases or decreases assets and liabilities, or equity, it shall be recognised by adjusting the carrying amount of the related asset, liability or equity item in the period of the change.



On occasion, there may be errors discovered in the financial statements from prior periods. Errors mean that the financial statements do not comply with IFRSs, contain either material errors or immaterial errors made intentionally. This differs from a change in estimates.

Errors are required to be corrected retrospectively in the first set of financial statements authorised for issue after their error discovery by:

  • Restating the comparative amounts of the prior period(s) in which the error exists; or
  • If the error occurred prior to the earliest prior period presented, a restatement of the opening balances of assets, liabilities and equity for the earliest prior period presented.

Disclosure highlights: should include the nature of the error, the amount of correction for each line item and the amount of the correction for the earliest prior period.


Type of Change Type of Adjustment
Change in Accounting Policy Retrospective Adjustment
Change in Accounting Estimate Prospective Adjustment
Correction of an Error Retrospective Adjustment


IFRS 8 – Operating Segments UFE Study Guide

Operating Segments (IFRS 8)
Last Updated: November 14, 2012

You can find a printer-friendly study sheet in PDF format by clicking here!

This IFRS applies to the financial statements for entities whose debt or equity is publicly traded or is in the process of becoming public. This also applies to subsidiaries with parents that meet the above criteria. Segment information must be separately reported.

What is an operating segment?

A component of an entity which meets all these criteria:

  • Engages in activities which earn revenue or incur expenses including with other internal components. Start-up activities yet to earn revenue are included.
  • Whose operating results are regularly reviewed by chief decision makers (often CEO or COO) about resource allocation.
  • For which discrete financial information is available.

Not every division of an entity is necessarily a segment. A corporate HQ or some functional departments who do not earn revenue or only earn incidental revenue would not be considered segments.

Reportable Segments

Quantitative Thresholds

Separate information must be reported if the following thresholds are met:

  • reported revenue, including external sales and intersegment sales or transfers ≥ 10% of total internal and external revenue for all segments
  • absolute amount of profit or loss≥ 10% of
    • combined reported profit of all operating segments that did not report a loss; and
    • the combined reported loss of all operating segments that reported a loss.
  • Assets are ≥ 10% of the combined assets in all operating segments
  • If management believes that a segment which does not meet the above thresholds should still be reported then it is permitted.
  • For operating segments that do not meet the quantitative threshold, entities may combine them based on the aggregation criteria.

Aggregation Criteria

Segments may be aggregated if they exhibit similar long-term financial performance and have similar economic characteristics. Two or more similar segments may be aggregated if they have similar:

  • nature of the products and services
  • nature of the production processes
  • types or class of customers
  • distribution methods used
  • regulatory environment

Additional Information

  • If the total external revenue reported by all operating segments ≤ 75% of the entities revenue, additional operating segments shall be identified as reportable segments, even if above criteria are not met until at least 75% of all segment revenue is included in reportable segments.
  • Information about all other activities or segments shall be reported as ‘all other segments’
  • If a new operating segment is identified in the current period, comparatives must be provided, even if this wasn’t reported previously.
  • An entity should use judgment when reporting more than 10 segments as the information may become too detailed.

Disclosure Requirements

Fairly detailed disclosure required. Some high-level requirements:

  • Factors used to identify reportable segments
  • Types of products and services of each segment
  • Information about segment profit or loss (internal+external), assets/liabilities, income tax expense, amortization, interest revenue and expense, material non-cash items
  • Reconciliation of segment amounts to entity-wide amounts

Examples of Segments Needing Disclosure

  • Information about major product or service lines
  • Information about geographical areas
  • Information about major customers

IFRS 11 – Joint Arrangements UFE Study Guide

Joint Arrangements (IFRS 11)
Last Updated: November 12, 2012

You can find a printer-friendly study sheet in PDF format by clicking here!

Note: This IFRS applies beginning January 1, 2013. It is examinable on the 2013 CKE and UFE.

This IFRS establishes principles for reporting by entities that have jointly controlled interests.

Joint Arrangements

A joint arrangement is an arrangement where two or more parties have control. Criteria:

  • Two or more parties are bound by a contractual arrangement – usually in writing but could be statutory
    • If in a separate vehicle, this would usually be incorporated somewhere in the charter or by-laws of the vehicle.
    • Terms set out: purpose of the activity, duration of the agreement, how board of directors are appointed, the decision making process, capital and other contributions required, how profits, losses, expenses are shared.

Joint Control: Contractually agreed sharing of control which exists when decisions about relevant activities requires the unanimous consent of all parties sharing control. This arrangement can include other parties who participate but do not control. At least two must control jointly.

It must next be determined whether the joint arrangement is a joint operation or a joint venture.

Joint Operation: Parties have the joint control of the arrangement having rights to the assets, and obligations for the liabilities, relating to the arrangement.

Joint Venture: Parties have the joint control of the arrangement having rights to the net assets of the arrangement.

Financial Statements

Joint Operation

Recognize, in relation to the entities interest in a joint operation:

  • Assets, including its share of any assets held jointly
  • Liabilities, including the share incurred jointly
  • Revenue from the sale of its share of the output arising from the joint operation
  • Share of the revenue from the sale of the output by the joint operation
  • Expenses, including its share of any expenses incurred jointly

Account for each of these using the applicable IFRSs.

Additional Sale or Contribution of Assets: Recognize gains and losses only to the extent of the other parties’ interest in the joint operation.

Purchase of Assets from Joint Operation: Do not recognize gains or losses until this asset is sold to an third party.

Parties participating but not having joint control of a joint operation but having rights to the assets and obligations for the liabilities shall account using this same method above. If no rights to assets or obligations for liabilities then use other applicable IFRSs.


Joint Ventures

Recognize interest in the joint venture as an investment and accounting for that investment using the equity method in accordance with IAS 28 – Investments in Associates and Joint Ventures.

IFRS 3 – Business combinations UFE Study Guide

Business Combinations (IFRS 3)
Last Updated: December 7, 2013

You can find a printer-friendly study sheet in PDF format by clicking here!

This IFRS applies when one business merges with or acquires another. This IFRS does not apply to joint ventures or acquisition of assets which do not constitute a business under common control.

Acquisition MethodBusiness combinations should be accounted for using the acquisition method.

1. Identify the acquirer

  • In each merger/acquisition, an acquirer must be identified.
    • Big picture: who has control/power over the other (voting rights, board of directors)
    • Exposure, or rights, to returns from the acquisition (exposure to both +/- returns)
    • Ability to use power over the acquisition to affect the amount of the returns

2. Determine the acquisition date – the date on which legal control is obtained unless a written agreement provides that control is obtained the day before the closing date.

3. Measure and recognize the assets acquired and liabilities assumed as well as any non-controlling interest in the acquiree that may exist

  • Assets acquired and liabilities assumed must meet the criteria for assets and liabilities.
  • Must be part of the same transaction (the merger/acquisition) and not as part of different transactions which may exist separately from a previous business relationship.
  • The acquisition may result in recognizing assets not previously recognized such as intangibles.
  • The assets acquired and liabilities assumed should be measured at their acquisition date fair values. With these exceptions:
    • Contingent liabilities – must be recognized if it is a present obligation which arises from a past event and its fair value can be measured reliably even if probability of occurrence is low. Subsequent accounting measures as the lesser of IAS 37 and the original amount.
    • Income taxes – In accordance with IAS 12 Income Taxes
    • Employee benefits – In accordance with IAS 19 Employee Benefits
    • Indemnification assets, Reacquired rights  – Not likely to be tested in my opinion
    • Share-based payment transactions – in accordance with IFRS 2
    • Assets held for sale – in accordance with IFRS 5

4. Recognize the difference as goodwill or a gain from a bargain purchase.

The purchase price must first be established and then goodwill is the excess of (a) over (b):

a)      Acquisition-date fair value of consideration transferred.

  • If not 100% acquisition then [acquisition-date FV] / [% acquired] in order to imply a 100% acquisition.

b)      The net acquisition-date amounts of assets acquired and liabilities assumed

Goodwill = FV of Consideration Transferred – The 100% Fair Value of acquired assets & liabilities.

Acquisition-related costs:

  • Should be expensed with the exception of costs to issue debt or equity securities which should be recognized in accordance with IAS 32 and IAS 39.

Bargain Purchase:

  • In cases where the amount in (b) exceeds the amount in (a) above then it is a bargain purchase which means that the acquirer is purchasing the net assets of the acquiree at a bargain. IFRS requires the reassessment of the amounts in (b) and if everything is correct post-reassessment then the gain is recognized in the income of the acquirer.

Business Combination in Stages:

  • When an acquisition occurs in stages, remeasure the previously acquired equity interest at its acquisition-date fair value and recognize the resulting gain or loss into income.

Measurement Period:

  • If the accounting for a business combination is not complete by the end of the reporting period, provisional amounts must be used for incomplete items on the financial statements.
  • During the measurement period which is a maximum of one-year, the acquirer shall retrospectively adjust the provisional amounts to reflect new information.


Disclosure requirements are considerable but unlikely to be tested extensively on the UFE.

Two main objectives:

1. Information that enables users to evaluate the nature and the financial effects of the business combination during the current period or after the end of the reporting period but before the financial statements are authorized.

  • Name and description of acquiree, acquisition date, percentage acquired, reasons, etc.

2. Information that enables users to evaluate the financial effects of adjustments recognized in the current period related to combinations that occurred in the current or previous period.

ASPE Section 3031 – Inventories

Inventory (ASPE)
Last Updated: October 10, 2012

You can find a printer-friendly study sheet in PDF format by clicking here!

Inventory is covered under

  • IFRS – IAS 2 (Inventories); and
  • ASPE – Section 3031 (Inventories)

This section applies to all inventories (for ASPE), except:

  • Contracts accounting for using the Percentage of Completion method
  • Financial instruments
  • Spare parts usually treated as inventory, but if major enough, can be classified as Property, Plant and Equipment.

See also notes on specific exclusions from measurement under Measurement of Inventories.



Inventories are assets:

  • Held for sale as part of the normal course of business (finished goods);
  • In the production process (unfinished goods)
  • Materials or supplies to be consumed in the production process/rendering services

Net realizable value = Selling price – Estimated cost of completion – Costs to make the sale

Fair Value = Selling price at an arms-length transaction on market

FV is the total revenue that the transaction will generate while NRV is the amount the entity expects to realize.

Measurement of Inventories

Inventory is measured at the lower of cost and net realizable value.

Cost = All costs to:

  • purchase,
  • convert
    • direct labour
    • systemic allocation of fixed/variable production overhead
  • bring the inventory to its present location and condition
    • import duties/taxes,
    • transport,
    • handling and other direct costs less any costs that are recoverable

Items that are excluded from inventory:

  • Abnormal wasted materials or labour
  • Storage costs unless these costs are necessary before a further production stage
  • Administrative overhead (not specific to inventory)
  • Selling costs

Interest costs are included when the inventory takes a substantial time to become finished and the entities policy is to capitalize interest costs.

Techniques for measuring costs

  • Standard Cost Method: Use normal levels of materials, labour, efficiency. Should be regularly reviewed for change in conditions.
  • Retail Method: Often used in retail industry. Reduce the sale value of the inventory by the appropriate percentage of gross margin.

Measurement Exclusions (This section does not apply)

  • For agricultural, forest and mineral products held by producers which are measured at net realizable value based on well-established practices in these industries.
  • Inventories held by commodity broker-traders who measure inventories at fair value less cost to sell. Changes in FV are recognized in net income in period of change.
  • Inventories of living animals and plants (biological assets) and the harvested product of the biological asset. However it does apply to assets processed after harvesting.

Cost Formulas

Must choose a specific method for inventories that have a similar nature.

  • Specified Identification: This method may be used when inventory is not interchangeable and can be specifically identified.
  • First-in, First-out: Inventory purchased first is considered sold first. Items remaining in inventory at period end were those purchased most recently.
  • Weighted Average: Each new item is assigned a weighted average cost based on the previous similar items at the beginning of the period and purchased during the period. Can be calculated on a periodic basis or as each shipment is received.

Net Realizable Value

Inventories may at times become obsolete or diminish in value and must be written down to net realizable value.

Evidence that a write down is necessary:

  • Damage to inventory
  • Obsolescence
  • Decline in selling prices

Inventories should be written down item by item but grouping is permitted for similar products with similar end purposes. It’s not permitted to write down inventories based on classification (finished goods, by geographic segment, etc.)

When the circumstances that existed which required the write down no longer exist, the write-down may be reversed back up to cost. The item is then valued at the lower of cost or revised net realizable value.


When inventories are sold, the carrying value of the inventory is recognized as an expense at the same time as the revenue is recognized.

When a write down is required, the write down is expensed in the period when the write down occurs. Reversals of write downs are also recorded in the period which they occur.


  • Accounting policies adopted to measure inventories including costing method.
  • Total carrying amount classified appropriately for the entity (i.e. merchandise, production supplies, materials, work in progress, finished goods, etc.)
  • The amount of inventory recognized as an expense during the period (cost of sales)

IAS 18 – Revenue UFE Study Guide

Revenue (IFRS)
Last Updated: October 1, 2012

You can find a printer-friendly study sheet in PDF format by clicking here!

Revenue is covered under

  • IFRS – IAS 18 (Revenue); and
  • ASPE – Section 3400 (Revenue)

Determine first whether the entity is a public entity required to use IFRS or private entity opting to use IFRS. Private entities opting to use ASPE should use the ASPE guidance. This standard covers the sale of goods and the rendering of services by an entity but does not apply to construction contracts nor extraction of mineral ores.

Under IFRS (IAS 18)


  • Revenue is the cash coming into the business from its ordinary business activity such as sale of goods or provision of services.
  • Revenue collected on behalf of another party (sales tax for example) is not an economic benefit for the entity and is excluded from Revenue.


  • Revenue is measured at fair value of consideration received or receivable on the date of the transaction. (IFRS 13 covers Fair Value)
  • When similar goods or services are swapped, this is not considered a transaction which generates revenue.
  • In transactions that have deferred receivable amounts and constitute a financing transaction, the time value of money should be considered and all future receipts are discounted using an imputed interest rate.
    • The imputed rate is the more determinable of the prevailing rate of a similar instrument; or
    • an interest rate that discounts the instrument to the current cash price of the good or service.

Identification of the Transaction

Recognition criteria are usually applied to individual transactions but there are many cases when there are separately identifiable components of a single transaction. This is sometimes referred to as multiple-deliverable transactions. When this occurs (use judgment) then the recognition criteria should be applied to each individual component. An example of this is the sale of software where there is also an identifiable amount of separate servicing for a given amount of time.

Sale of Goods

Revenue Recognition Criteria (All must be met):

  • significant risks and rewards have been transferred
    • Consider: performance warranties, consignment sales, installation still required, buyer can rescind the contract and seller is unsure about probability of return. All these might indicate risks remain.
    • Insignificant risks such as return options for unsatisfied customers should still be recognized if an estimate of returns can be made.
  • managerial involvement and control over the good sold has ceased
  • the amount of revenue is measurable
  • it is probably that the economic benefits will flow to the entity
    • When it’s uncertain that you will collect from an entity after revenue is recognized this is treated as a bad debt expense not a reduction in revenue.
  • the entity’s costs relevant to the transaction can be measured reliably, this is the matching principle and may result in deferred revenue liability.

Rendering of Services

Revenue for services is recognized by reference to the stage of completion (percentage of completion method). The following conditions must all be met:

  • the amount of revenue is reliably measurable
  • it is probable that the economic benefits will flow to the entity
    • When it’s uncertain that you will collect from an entity after revenue is recognized this is treated as a bad debt expense not a reduction in revenue.
  • the stage of completion on the reporting period can be measured reliably
    • A variety of ways can be used to measure the stage of completion including surveys of work performed, services performed / total services, or the proportion of costs to-date / total expected costs. Ignore progress payments.
    • When services are performed in an indeterminate amount of acts then usually it’s recognized straight-line over the specified period unless one act is more significant than any other act in which case recognition is postponed until that act is complete.
    • When the outcome of rendering services cannot be reliably measured then revenue shall be recognized only to the extent of the expenses recognized are recoverable. If recoverability of these expenses is not likely than no revenue should be recognized.
  • the entity’s costs relevant to the transaction can be measured reliably

Interest, Royalties and Dividends

Interest, Royalties and Dividends shall be recognized when it’s probable that the economic benefits will flow to the entity and the amount of revenue is measurable.

Revenue is recognized for each as follows:

  • Interest: Effective interest method (IAS 39 and AG5-AG8)
  • Royalties: Accrual basis based on the substance of the agreement
  • Dividends: When the right to receive the payment is established

Please report errors, omissions or suggestions to technical@ufeblog.com

Do I have to remember everything from University in order to write the UFE?

The answer is to some extent yes, and to some extent no.

Yes – many of the University topics you would have learned for accounting are in some way covered by the UFE. You can see the specific topic coverage in the UFE competency map (This version is for the 2012 UFE but a new one will be out soon and should be similar).

 No – In University you would have likely learned them in far more detail than is covered in the UFE. Your responses in University would have also likely had to be to a higher degree of accuracy than they are on the UFE. 

If you are writing in 2013, you’ve got almost a year now to get yourself ready for the UFE. Step 1 is to review technical and give yourself a solid technical base because come next summer your entire focus will be on learning to write and debrief simulations and perfect your ability to write a solid response to a business case.

I’ll tell you right now: the number one fear of UFE writers is that they are not technically sound. This feeling seems to persist even up to the UFE and many students spend too much time on technical close to the UFE and not enough time writing simulations and debriefing them properly.

I’ll be working on some technical guides as we lead up to the CKE and next summer so keep coming back as we continue our march to the 2013 UFE.

What do previous writers think? How much technical from University did you need and to what extent?

Non-Monetary Transaction [IAS 16, IAS 38, IAS 40, SIC-31 and Section 3831]

Non-Monetary Transactions
Last Update: November 16, 2013

You can find a printer-friendly study sheet in PDF format by clicking here!

Non monetary transactions are covered under

  • IFRS – IAS 16 (Property, plant and equipment), IAS 38 (Intangible Assets), IAS 40 (Investment Property) and SIC-31(Revenue – Barter transactions involving advertising services); and
  • ASPE – Section 3831 – non-monetary transactions

Determine first whether the entity is a public entity required to use IFRS or private entity opting to use IFRS. Private entities opting to use ASPE should use the ASPE guidance.

Under IFRS (IAS 16)


Non-Monetary Exchanges of Advertising (SIC-31 Interpretation)

Revenue from a non-monetary barter transaction involving advertising cannot be measured at the fair value of advertising services received. A seller may recognize revenue at the fair value of advertising services provided by reference to a non-barter transaction that is:

a)    similar to the barter transaction;
b)    occurs often;
c)    represents a predominant number of transactions and amount when compared to all transactions to provide advertising that is similar to the advertising of the barter transaction;
d)    involves cash or other such forms of consideration that has a reliable fair value; and
e)    Does not involve the same counterparty as in the barter transaction.

Other Non-Monetary Exchanges

Non-monetary transactions are measured at the fair value of the asset received unless the fair value of the item given up is more clearly measurable. The entity measures the transaction at fair value unless one of the following conditions is met:

a) the transaction lacks commercial substance – in other words, the items exchanged would provide similar risk and cash flows as before if the transaction lacks commercial substance;
b) the fair value of both the asset given up or asset received is not reliably measurable

The acquired item is measured this way even if the item given up cannot be immediately derecognised.


Under ASPE (Section 3831)

Under ASPE, the entity must measure an asset exchanged or transferred in a non-monetary transaction at the more reliably measurable of the fair value of the asset given up or received unless one of the following situations exists:

a)    the transaction lacks commercial substance – in other words, the items exchanged would provide similar risk and cash flows as before if the transaction lacks commercial substance;
b)    the transaction is an exchange of a product held for sale in the normal course of business;
c)    neither fair value of the asset received or exchanged is reliably measurable; or
d)    the transaction is a non-monetary non-recipricle transfer to owners – this is a spin-off or other form of restructuring or liquidation

Gains and Losses are recognized in net income for the period.

Please report errors, omissions or suggestions to technical@ufeblog.com

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