Reference no: EM132998746

On January 1, 20X4, JVE Corp. paid $1,000,000 cash to acquire 35% of the common shares of PG Corp. At the time of acquisition, the carrying amount of PG's common shares was $900,000, and its retained earnings were $1,500,000.

The fair values of the identifiable net assets (INA) approximated their carrying values except for the following:

The fair value of machinery was estimated to be $400,000; the net book value was $450,000.

Other information follows:

1. The remaining useful life of machinery at the date of acquisition was five years, and the estimated residual value was $0. Both companies depreciate their equipment on a straight-line basis.
2. PG's net income for the years ended December 31, 20X4, and December 31, 20X5, was $125,000 and $135,000, respectively.
3. On September 1, 20X4, PG declared and paid $75,000 of dividends on its common shares; no other dividends have been declared since. The investment in the associate was not impaired.
4. On January 1, 20X6, JVE reduced its ownership stake in PG to 25%. The cash proceeds realized from the sale of the shares was $330,000.

Problem 1: What is the amount of gain to be reported on the partial disposal of PG's common shares on January 1, 20X6?