Table of Contents
Below is the summary of accounting for asset exchange:
Cost of new asset
The recorded cost of the new asset cannot exceed the fair value of the new asset.
| Cash given | Fair value of old asset plus cash. | Lower of book value of old asset plus cash or fair value of old asset plus cash. |
| Cash received | Fair value of old asset less cash. | Lower of allocated book value of old asset or fair value of old asset less cash. |
Gain or loss on exchange
| Cash given | Both gains and losses recognizable; equal to difference between fair and book values of old asset. | Only losses recognizable; equal to difference between fair and book values of old asset. |
| Cash received | Both gains and losses recognizable; equal to difference between book value of old asset and sum of values received. | Gains recognizable only on portion considered sold; equal to difference between allocated book value and cash received. Losses recognizable in total; equal to the difference between the book value of the old asset and the sum of the cash received and the fair value of new asset. |