Dear All 
According to IAS 16, in an exchange transaction asset should be recorded at fair value.
My question is which assets fair value?
Asset given up     or
Asset acquired 
considering that we have the fair value of both.
fair value of assets given up in case of dissimilar assets , In case of similar assets no transaction will be recorded.

IAS 16 prescribes that the acquired asset in an exchange is measured at fair value unless the exchange transaction lacks commercial substance or if the fair value of neither the asset received or given up can be reliably measured. The acquired asset would be measured in this way even if the asset being given up cannot be derecognised immediately.

In the case described by you, the fair value of both assets is known. So I guess the next question is – does the transaction have commercial substance? However, it would be the fair value of the asset acquired.


IAS 16 also states that when the fair value of the asset received can be measured reliably, the asset should be measured at that value.
If the fair value of asset given is more evident, then the incoming asset is measured at the fair value of the asset given.
When both the fair values are not evident, the carrying amount of the asset given up is considered as the value for recognizing the incoming asset.

As per IAS 16 when a fixed asset is acquired in exchange of another fixed asset, its cost is usually determined by reference to the fair market value of the consideration given (asset given).

However, IAS-16 allows recognition of the new asset at the book value of the asset given only if:

(a)The exchange transaction lacks commercial substance; or

(b)The fair value of neither the asset received nor the asset given up is reliably measurable. 

If the acquired asset is not recorded at fair value, its cost is the carrying amount of the asset given up [IAS16.24 (R.05)].







For the sake of world peace and happiness, maybe, Farhan should read paragraphs 23 to 28 of IAS 16, as updated for amendments and then also the basis for conclusion section for exchange of assets to determine the actual treatment that may be required in the correct context?