Kelly Corp. barters with Ace Corporation for goods that are similar in nature and value. The value of the goods was $1,000. The

Question

3 years ago

6

Kelly Corp. barters with Ace Corporation for goods that are similar in nature and value. The value of the goods was $1,000. The

cost of the goods was $400. If Kelly uses IFRS to prepare financial statements, what amount should Kelly recognize as income?a. $1,000
b. $0
c. $400
d. $600

Business

1 answer:

MArishka [77] · Answer 1 · 2022-08-15T23:35:24+03:00

Answer:

B. $0

Explanation:

The International Financial Reporting Standards (IFRS) specifically Internal Accounting Standards (IAS) 18 on revenue specifically states that where there is a barter transaction that is the exchange of goods or services, the transaction will not be recognized as one generating revenue when the goods or the services being exchanged are similar in nature. If it is not recognized as a revenue generating transaction then no revenue will be recognized as well

Since Kelly Corp barters goods with Ace Corporation established to be similar in nature , then according to IFRS Kelly cannot recognize any income on the transaction.