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Determine the unrealized gain on transfer to ST Company

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Question - S Co. and T Inc. formed ST Company on January 1, 2020. S Co. invested equipment with a carrying amount of P150,000 and a fair value of P390,000 for a 40% interest in ST Company, while T Inc. contributed equipment, which was similar to the equipment contributed by S Co., with a total fair value of P635.000, for a 60% interest in ST Company. The equipment has an estimated useful life of 10 years. On December 31, 2020, ST Company reported a net income of P142.800. Assume that the transaction does not have a commercial substance in this situation because S Co. owned a similar portion of the same type of equipment both before and after the contribution to the joint venture.

Required - Determine the unrealized gain on transfer to ST Company on January 1, 2020 on the books of S Co.

Reference no: EM133111482

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