Final answer:
The assets transferred to a corporation by a limited liability partnership are recorded at current fair values in the corporation's accounting records, adhering to accounting principles and ensuring the balance sheet accurately reflects the firm's financial position.
Step-by-step explanation:
When a limited liability partnership is incorporated, the assets transferred to the corporation are indeed entered in the accounting records of the corporation at current fair values. This accounting practice ensures that the balance sheet accurately reflects the value of the assets at the time of incorporation. This entry aligns with the accounting principle that mandates recording assets at their fair market value upon acquisition by a company.
In accounting, the 'T' in a T-account serves to separate the assets, listed on the left side, from the liabilities and net worth, which are on the right. When a company, such as a bank, records its assets and liabilities, the total assets will always equal the liabilities plus net worth, ensuring the balance sheet is balanced. For instance, when customers deposit money, these are considered liabilities for the bank, and the bank's accounting records must reflect this.