It will be at the fair value of the debt given up. IAS16.24 - "One or more items of property, plant and equipment may be acquired in exchange for a non-monetary asset or assets, or a combination of monetary and non-monetary assets. The following discussion refers simply to an exchange of one non-monetary asset for another, but it also applies to all exchanges described in the preceding sentence. The cost of such an item of property, plant and equipment is measured at fair value unless (a) the exchange transaction lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable. The acquired item is measured in this way even if an entity cannot immediately derecognise the asset given up. If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset given up."
I do no know why but this is one of my favorite topics in accounting.
Thank you for your comment. We are glad you enjoy it as it is fundamental to understanding the rest of accounting.
You helped me a lot. I wish you were my lecturer!
Thank you for your lovely comment.
Thank you sir. Hope you'll gonna make more videos.
How are the measurements in 2016 different from the old in the video?
Richard Starkey Okay thank you.
If we obtain an asset in an exchange of an outstanding debt, how is that asset measured?
It will be at the fair value of the debt given up.
IAS16.24 - "One or more items of property, plant and equipment may be acquired in exchange for a non-monetary asset or assets, or a combination of monetary and non-monetary assets. The following discussion refers simply to an exchange of one non-monetary asset for another, but it also applies to all exchanges described in the preceding sentence.
The cost of such an item of property, plant and equipment is measured at fair value unless (a) the exchange transaction lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable.
The acquired item is measured in this way even if an entity cannot immediately derecognise the asset given up. If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset given up."
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