The recorded equity of a subsidiary at acquisition will always equal the fair value of the subsidiary's net assets.

The recorded equity of a subsidiary at acquisition can be different from the fair value of the subsidiary's net assets. This is because the recorded equity may include items such as goodwill, which is not a separately identifiable asset and has to be estimated based on the excess of the purchase price over the fair value of net assets acquired. Additionally, the fair value of net assets acquired may include items not included in equity, such as contingent liabilities that are not recognized on the balance sheet.