Difference Between Monetary and Non-Monetary Items

Difference Between Monetary and Non-Monetary ItemsMonetary item is an asset or liability carrying a value in dollars that will not change in the future. These items have a fixed numerical value in dollars, and a dollar is always worth a dollar. Monetary assets (such as cash and accounts receivable) and monetary liabilities (such as notes and accounts payable) that have a fixed exchange value unaffected by inflation or deflation.

Nonmonetary item is an asset or liability that does not have a fixed exchange cash value, but whose value depends on economic conditions.

The differences between monetary and nonmonetary item are given below;

AspectMonetary ItemNonmonetary Item
Exchange RateIt has a fixed numerical value of the exchange rate.The fixed or determinable amount of exchange rate is absent.
Item IncludesIt includes a current asset or liability.It includes a fixed asset or liability.
CalculationThe value of a monetary asset is usually calculated according toIt is calculated by the acquisition cost value.
Inflation EffectsHolding monetary items during a period of inflation will result in a purchasing power loss gain.During the period of inflation, the price will be adjusted.
Period of TimeA monetary asset can be accessed in a relatively short period of timeIt cannot be accessed within a short time.
TangibilityIt is tangible.It is intangible.
CompensationThere is no compensation for changes in the value of money.There is compensation for changes in the value of money.
ExampleCash, Account Receivable, Notes, and Account Payable.Copyrights and Patents, Goodwill, Inventories, Property.

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