Question

Assuming no impairment in value prior to transfer, assets transferred by a parent company to another entity it has created should be recorded by the newly created entity at the assets'?

Answer 1

Assets transferred by a parent company to another entity it has created should be recorded by the newly created entity at fair value.

Step-by-step explanation:

When a parent company transfers assets to another entity it has created, the newly created entity should record those assets at their fair value. Fair value is the amount that the assets could be exchanged for in an arm's length transaction between knowledgeable, willing parties in the open market. This means that the assets should be recorded at the value they would be worth if they were to be sold or transferred to another party at the time of the transfer.