When a sole proprietorship incorporates,the assets of the new business are recorded at cost.

Question

Quizplus · Accepted Answer

When a sole proprietorship incorporates, the assets of the new business are recorded at fair market value, not at cost. This is because the incorporation of a sole proprietorship involves the transfer of assets from the individual owner to the corporation, which is a separate legal entity. The fair market value of these assets reflects their current worth in the market and is a more accurate representation of the value of the corporation's assets.

When a Sole Proprietorship Incorporates,the Assets of the New Business