If an asset is transferred in a company at a profit, what does the purchasing company record?

When an asset is purchased by a company, the purchasing company typically records the asset at the amount paid for it. This reflects the transaction's economic reality, where the company recognizes the expenditure incurred to acquire the asset. Recording the asset at its purchase price ensures that the company accurately depicts its financial position, showing the amount it has invested in the asset.

This approach aligns with the fundamental accounting principle that requires assets to be recorded at their cost to the entity, which represents the cash or cash equivalent paid for the asset. This cost-based measurement takes into account the actual resources consumed by the company in acquiring the asset, providing relevant information for future financial decisions and assessments.

By valuing the asset at the amount paid, it also avoids complications arising from potential internal transfers or revaluation, ensuring a straightforward perspective on the company's assets and reducing ambiguity in financial reporting.