CAF-1 · Chapter 3 · Question 1 of 15
Epsilon Ltd acquired a new machine by exchanging an older model with a supplier. The transaction lacks commercial substance. How should Epsilon measure the cost of the new machine at initial recognition?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) At the carrying amount of the asset given up.
Explanation
If an exchange transaction lacks commercial substance, or if fair values cannot be reliably measured, the acquired asset is measured at the carrying amount of the asset given up.
More IAS 16 Property, Plant and Equipment MCQs
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