Aco acquired all of the shares of Bco for a price of $1000, resulting in an acquisition of control. Bco’s only assets were Class 43 and 8 assets with an aggregate UCC of $1100 that were valued by a professional valuator immediately before the acquisition of control as having an aggregate FMV of $1500. Should the depreciable property be valued as per the appraisal or based on the $1000 share purchase price? CRA responded:
… $1,000 … would be a function of the FMV of the net assets of Bco. Since Bco would have no liabilities at that time, it appears to us that the total FMV of Bco's assets would also be $1,000 immediately before the particular time. … [A] method of determining the FMV of property of a particular prescribed class based on objective data such as an independent appraisal report, a price list, a sales transaction of similar property, etc., would generally be an acceptable method. … [I]n this case the amounts established by the independent appraiser could be used as a basis for allocating the $1,000 to the various assets of Bco immediately prior to the time of the acquisition of control.