Which of the following is true regarding the fair value of assets in a split-interest agreement?

In a split-interest agreement, the fair value of assets is recognized as an asset at inception. This approach aligns with accounting principles that require the recognition of an asset when there is a future economic benefit that could flow to the entity. In such agreements, one party provides an asset for a specified period, and the other party or parties benefit from that asset over time.

When the asset is first recognized at its fair value, it reflects the initial measurement of the resources the entity has access to. This recognition at inception is crucial, as it establishes the baseline for the asset on the balance sheet and facilitates proper financial reporting and management of resources associated with split-interest agreements.

The expectation is that this asset will provide future benefits, thus fulfilling the criteria for recognition. Following the inception, the treatment of the asset might require additional considerations, such as whether it needs to be revaluated or not, but the key point is that the fair value is indeed recognized and recorded as an asset right from the beginning of the agreement.