# ASC 845-10-25: Nonmonetary Transactions — Overall — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/845/10/#25-recognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:ee73bea317e651b547d0461747c407b99fada779aa035ad7c310b4aa0ea15a00 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 845-10-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/845/10/#25-recognition) SEC content: no #### Basic Principle ##### [845-10-25-1](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:0693d7fdbdec328f6bc6d6cd2a5fe646f2edac90c8fea92fc3bfa02d8a776c11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reciprocal transfer of a [nonmonetary asset](https://asc.understandingaccounting.org/glossary/n/#nonmonetary-assets-and-liabilities "Nonmonetary assets and liabilities are assets and liabilities other than monetary ones. Examples are inventories; investments in common stocks; property, plant, and equipment; and liabilities for rent collected in advance.") shall be deemed an [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "An exchange (or exchange transaction) is a reciprocal transfer between two entities that results in one of the entities acquiring assets or services or satisfying liabilities by surrendering other assets or services or incurring other obligations.") only if the transferor has no substantial continuing involvement in the transferred asset such that the usual risks and rewards of ownership of the asset are transferred. ##### [845-10-25-2](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:0a4bbc797c60ae655f8911b6100985b5ef1cd9276a81b1b2ce26bb0bde06be16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 845-10-30 for general guidance on gain or loss recognition for nonmonetary transactions. #### Spinoffs or Other Distributions of Loans Receivable to Shareholders ##### [845-10-25-3](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:f1c9ab317ed81287c2aedb33322ee434356ed4e1bd3b357952e6ca1bc4c06880 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When an entity distributes loans receivable to its [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.") by forming a [subsidiary](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)"), transferring those loans receivable to the subsidiary, and then distributing the stock of that subsidiary to shareholders of the parent, the transaction is not a spinoff because the subsidiary does not constitute a business. Rather, the transaction shall be considered a dividend-in-kind. ### Purchases and Sales of Inventory with the Same Counterparty ##### [845-10-25-3A](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-3A) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:92af42bf50e8d8088392261017a21a44fe34178c6e6b888b36537de2cf6ccc9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [845-10-15-6 through 15-7](https://asc.understandingaccounting.org/asc/845/10/#845-10-15-6) for the requirements to combine inventory purchase and sales transactions with the same counterparty that are entered into in contemplation of one another, or that are legally contingent. ##### [845-10-25-4](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:5eee1c18555de590b67d627a93da9f30c46ec59ef1858151a63b629e7fe216f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In situations in which an inventory transaction is not legally contingent upon the performance of another inventory transaction with the same counterparty, the following factors (referred to as indicators) may indicate that a purchase transaction and a sales transaction were entered into in contemplation of one another: 1. a There is a specific legal right of offset of obligations between counterparties involved in inventory purchase and sales transactions. The ability to offset the payable(s) and receivable(s) related to the separately documented inventory purchase and sales transactions indicates that there is a link between them and, therefore, it is an indicator that the separately documented inventory transactions were entered into in contemplation of one another. This indicator is more relevant to settlement provisions relating to inventory purchase and sales transactions that are specifically identified (specified legal right of offset) by both counterparties than to inventory transactions that are netted as part of a master netting agreement that encompasses all transactions (inventory and noninventory) between the two counterparties. 2. b Inventory purchase and sales transactions with the same counterparty are entered into simultaneously. If an inventory purchase transaction is simultaneously entered into with an inventory sales transaction with the same counterparty that is an indication that the transactions were entered into in contemplation of one another. 3. c Inventory purchase and sales transactions were entered into at terms that were off-market when the arrangement was agreed to between counterparties. If an entity enters into an off-market inventory transaction with a counterparty, that is an indication that the transaction is linked to, and entered into, in contemplation of another inventory transaction with that same counterparty. This indicator may be more relevant for transactions with products that have readily determinable market prices, such as [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "An exchange (or exchange transaction) is a reciprocal transfer between two entities that results in one of the entities acquiring assets or services or satisfying liabilities by surrendering other assets or services or incurring other obligations.")\-traded commodities, than for transactions with products that are subject to greater discretionary pricing. 4. d Relative certainty that reciprocal inventory transactions with the same counterparty will occur. An entity may sell inventory to a counterparty and enter into another arrangement with that same counterparty whereby that counterparty may, but is not contractually required to, deliver an agreed-upon inventory amount. If that counterparty chooses to deliver its product to the entity, the entity is obligated to purchase that product. The more certain it is that both inventory transactions will occur, the stronger the indication that the two inventory transactions were entered into in contemplation of one another. None of the above indicators taken individually is determinative nor is the list all-inclusive. ##### [845-10-25-5](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:2fe85a2daf8628e8ef4ddc445f9f23cd567024ec6d6992547143f38620531055 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If two or more inventory purchase and sales transactions are combined for the purposes of applying the guidance in this Subtopic, an entity shall apply the guidance in paragraphs [845-10-30-15 through 30-16](https://asc.understandingaccounting.org/asc/845/10/#845-10-30-15) . ### Exchanges Involving Monetary Consideration ##### [845-10-25-6](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:eefb0348bdb2169c12a6f9580a792b1f09b4f744a5358fa333521bfab2738721 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "An exchange (or exchange transaction) is a reciprocal transfer between two entities that results in one of the entities acquiring assets or services or satisfying liabilities by surrendering other assets or services or incurring other obligations.") of [nonmonetary assets](https://asc.understandingaccounting.org/glossary/n/#nonmonetary-assets-and-liabilities "Nonmonetary assets and liabilities are assets and liabilities other than monetary ones. Examples are inventories; investments in common stocks; property, plant, and equipment; and liabilities for rent collected in advance.") that would otherwise be based on recorded amounts but that also involves monetary consideration (boot) shall be considered monetary (rather than nonmonetary) if the boot is significant. Significant shall be defined as at least 25 percent of the fair value of the exchange. If the boot in a transaction is less than 25 percent, the pro rata gain recognition guidance in paragraph [845-10-30-6](https://asc.understandingaccounting.org/asc/845/10/#845-10-30-6) shall be applied by the receiver of boot, and the payer of boot would not recognize a gain. ##### [845-10-25-7](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:ec884345ccbe9d6651ce8316174a233adeadec5ff8b28cb391eb190795ea32ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [845-10-25-8](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:e9a51b86c906f85c56e6b7ea63bebf89da3f1af627ffd6c81a10df9e26827ff5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [845-10-25-9](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:43f57352941cb7d83b6b4c51590b5a305b75bdc50affc50008d338492a7c0f56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/). ##### [845-10-25-10](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:e4e3254f64b358cdb06d558f71edd67549de1eea4e80b5e61869929a7c276815 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/). ##### [845-10-25-11](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:385aaa9924256c710d55675d0e0142d032aadc5f73424df334b5c04651818068 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/). ##### [845-10-25-12](https://asc.understandingaccounting.org/asc/845/10/#845-10-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:59:34.071Z to 2026-09-10T01:59:34.071Z Record version: sha256:aab2e4e69e246a4105132780f73fa8885c1c3d1884c5441e6d8b53084bbd039f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/).