Asked by Claudia Reyes on May 11, 2024
Verified
An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange.
Commercial Substance
A term used in accounting to indicate that a transaction has caused a change in the economic circumstances of a business.
Future Cash Flows
Estimated amounts of money expected to be received or paid out in the future due to current or planned operations or investments.
- Understand the impact of various transactions on the documentation of asset gains or losses.
Verified Answer
EN
Edgar N. BarrozoMay 12, 2024
Final Answer :
False
Explanation :
An exchange has commercial substance if the entity's future cash flows are expected to change significantly as a result of the exchange.
Learning Objectives
- Understand the impact of various transactions on the documentation of asset gains or losses.