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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. S co invested equipment with a carrying amount of 140,000 and a fair value of 490,000 for 40% interest in ST company, while T Inc contributed equipment which was similar to the equipment contributed by S cp. Total Fair Value of 735,000 for a 60% interest in the ST company. The equipment has an estimated useful life of 10 years. On December 31, ST company reported a net income of 142,800. Assume that the transaction does not have 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. Determine the unrealized gain on transfer to ST Company on January 1.

Reference no: EM133179933

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