Question

Expalin the difference between a transaction having commercial substance and a transaction lacking commercial substance and how the accounting would be handled in both transactio s.

Answer 1

Answer)

A transaction with commercial substance have implies on future cash flows i.e if the future cash flows increase or decrease due to such transaction,exchange in particular is said to have commercial substance and if such transaction,exchange in doesn't have any future estimated cash flows changes then it is said to doesn't have any commercial substance in it.

Accounting changes as while recording a transaction with commercial substance we will record the gain or loss of such exchange while its needs is not there in transaction without commercial substance.