If a capital asset is first donated to a discreetly presented component unit, then later to an enterprise fund of the primary government, how should it be ultimately valued?

The valuation of a capital asset that has been transferred from one entity to another, specifically from a discreetly presented component unit to an enterprise fund, typically revolves around the fair value principles established by accounting standards.

In this scenario, the asset is initially donated to a component unit, which means that its initial recorded value would be the fair value at the time of that donation. The key aspect to understand is that when this asset is later transferred to the enterprise fund of the primary government, it should not be revalued at that later date but rather maintain its original valuation from the component unit's perspective.

The fair value at the time of donation to the enterprise fund would generally be consistent with its last recognized valuation as per the component unit records. Thus, it becomes critical to note that the enterprise fund, when receiving the asset, would utilize the historical cost or fair value established at the point of donation to that component unit rather than attempting to revalue it.

This is reflective of the accounting principle that values the asset based on its historical recognition and avoids unnecessary re-evaluations that could compromise consistency and comparability across government reports.

Overall, obtaining and reporting the fair value at the date of donation to the component unit is essential, as