In simple words, non-monetary transactions are exchanges and nonreciprocal transfers that involve little or no monetary assets or liabilities. While monetary assets are assets whose amounts are fixed in terms of units of currency (e.g. cash, accounts receivable, and notes receivable), non-monetary assets are assets other than those mentioned assets. Examples are inventories, investments in common stock; and property, plant, and equipment.

In general, any exchanges and non-reciprocal transfers that involve little or do not involve cash, accounts receivables, notes receivable, accounts payable and note payable are considered as non-monetary transactions.

Other transaction examples are: dividends-in-kind, non-monetary assets exchanged for common stock, charitable donations of property, contributions of land by a state or local government to a private companies, exchanges of inventory for similar products. How are they grouped and how are those non-monetary transactions accounted? Those are what I am going to discuss through this post, based on the most current accounting standard codification codenamed ASC-845. Along with the rules, I also include necessary case examples as illustrations for better understanding. Sure, the journal entries too. But before that, let’s have a look at types of transactions that are not treated as non-monetary. Read on…