Final answer:
Valuing property, plant, and equipment and intangible assets acquired through nonmonetary exchanges relies on recording them at fair market value or book value of the asset given up if market value is not clear, considering potential to generate future profits against the costs of acquisition.
Step-by-step explanation:
The basic principle for valuing property, plant and equipment and intangible assets acquired in exchange for other nonmonetary assets is that they should be recorded at their fair market value, unless this value is not clearly evident, in which case, the book value (or carrying amount) of the asset given up is used. When businesses engage in such exchanges, they consider the expected investment benefits, such as future profit potential and the investment costs, which include factors like interest rates. Therefore, when valuing these exchanged assets, firms look at their potential to generate future profits and compare it with the cost incurred to acquire them. Tangible assets like housing can also provide a moderate rate of return and nonfinancial benefits such as the utility derived from living in them. Yet, they carry risks and considerations regarding liquidity, further highlighting the importance of an accurate and prudent valuation process.