BU547 Lecture 3: Non-monetary transactions
Document Summary
The entity uses its expectations about its use of the asset rather than the use assumed by marketplace participants. Gains / losses resulting from a non-monetary transaction: recognized in net income for period. If one is not met = carrying value. Fortel inc. is a small canadian company that has been in operation for 20 years and reports under aspe. The company designs and markets radio frequency circuits and related technologies used by original equipment manufacturers in canada and the united. One of fortel"s largest customers, arvege co. , is having financial difficulties. Arvege is important to fortel, so fortel"s management is working closely with arvege to revitalize the business. Fortel had an agreement to sell arvege ,000,000 worth of goods needed to keep the business operational. Shortly after the sale was agreed to, arvege was concerned that it was tight on cash. Fortel agreed to accept a piece of land with a fair value of ,500,000 as payment.
