A nonmonetary exchange is the transfer of assets and/or liabilities with another entity. The most common situation is when two organizations exchange assets, such as a real estate swap or the exchange of one fixed asset for another. The accounting for a nonmonetary exchange is based on the fair values of the assets transferred. This results in the following set of alternatives for determining the recorded cost of a nonmonetary asset acquired in an exchange, in declining order of preference:
At the fair value of the asset received, if the fair value of this asset is more evident than the fair value of the asset transferred in exchange for it.