The Following Information Pertains to Questions

question 20

Multiple Choice

The following information pertains to questions
John Inc and Victor Inc.formed a joint venture on January 1,2010.John invested plant and equipment with a book value of $500,000 and a fair value of $800,000 for a 30% interest in the venture which was to be called Jinxtor Ltd.Victor contributed assets with a fair value of $2,000,000 (including $200,000 in cash) for its 70% stake in Jinxtor.Jinxtor reported a net income of $3,000,000 for 2010.John's plant and equipment were estimated to provide an additional 5 years of utility to Jinxtor.
-Assume that the facts provided above with respect to the Jinxtor joint venture remain unchanged except that John receives $240,000 in return for investing its plant and equipment.What would be the unrealized gain arising from this transaction?

• A)$ 142,500
• B)$ 124,500
• C)$ 60,000
• D)$ 85,500

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Definitions:

Number Expressed

A way of representing a quantity or value in terms of digits or symbols.

Thousandths

A fractional part in a series, representing one part out of a thousand.

Hundred-Thousandths

A decimal fraction represented as one part in a hundred thousand, indicating a very small quantity in precise calculations.

Decimal Point

The period between two numerals.