Final answer:
Gain recognition in accounting for non-monetary exchanges of plant assets occurs when the exchange has commercial substance and can be influenced by whether additional cash is paid or received. When an exchange lacks commercial substance, gain recognition may be deferred.
Step-by-step explanation:
The question relates to how gains from non-monetary exchanges should be recognized in accounting, specifically exchanges of plant assets. Accounting standards generally require recognition of a gain when the exchange has commercial substance, meaning the future cash flows of the asset received are expected to change significantly. However, recognition can be affected by whether cash is paid or received in the transaction.
Accounting recognition should be given to the gain realized on a non-monetary exchange of plant assets when the exchange has commercial substance and additional cash is paid (c), because this scenario generally leads to gain recognition. When additional cash is received in an exchange that has commercial substance (b), this also leads to gain recognition. However, when there is no commercial substance to the exchange, and additional cash is paid (a), gain recognition has a specific accounting treatment that might defer the recognition of the gain.
It's important to note that the discussion above assumes that the exchange of assets has commercial substance, which is when the economic position of the company is expected to change as a result of the exchange. Alterations can also be due to new configurations in production, technology, management, finance, and law, all of which can add to the gains from trade.