In a non-monetary transaction, how is the transaction measured?

In a non-monetary transaction, the correct method of measurement is at the fair value of the asset given up. This approach is consistent with the principle of recognizing the economic substance of the transaction rather than its form. By measuring the transaction at the fair value of the asset given up, financial reporting reflects the value that the transferring party has effectively relinquished in the exchange.

This measurement method aligns with the underlying accounting principles, which emphasize the importance of fairness and relevance in reporting transactions. When an asset is exchanged, the fair value provides insight into what the asset is worth in the current market, thus enabling a more accurate reflection of the company's financial position and performance.

Other methods, such as using the carrying amount of the assets or the cash value of the assets, may not adequately reflect the current market conditions or the actual value being exchanged. Moreover, relying on estimated future cash flows could lead to subjectivity and less reliable estimates, as it involves forecasting and not concrete assessments of current value.