IAS 16Chapter 5Lesson 3
Deferred payment, exchanges of assets and government grants
Step 1 of 10Learning objectives
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Three particular ways of acquiring an item: paying beyond normal terms (cost is the cash price equivalent, the difference becomes interest expense), exchanging one asset for another (fair value if the exchange has commercial substance and a reliable fair value, otherwise the carrying amount of the asset given up), and receiving a government grant (which may reduce the carrying amount under IAS 20).
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Learning objectives
- Calculate the cash price equivalent of a deferred payment and spread the interest expense over the credit period.
- Assess whether an exchange of assets has commercial substance and whether fair value is reliable, then determine the cost of the asset received.
- Record an exchange with or without commercial substance, including the gain or loss on the asset given up.
- Identify the possible effect of a government grant on the carrying amount, by cross-reference to IAS 20.