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What is TIGERs realized gain that can be recognized

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Question - TIGER and LION formed a joint venture called JAGUAR on March 1 2020. Presented below are some relevant details on the establishment of this Joint Venture:

All transactions were considered to be of commercial substance.

The fiscal year end for all three entities (TIGER, LION, JAGUAR) is December 31.

TIGER contributed plant and equipment with a book value of $500,000, and a fair value of $850,000. As of January 1, this plant and equipment had an estimated additional 14 years of use, with no residual value.

TIGER's share in the venture was 35%.

LION contributed assets with a book value of $1,000,000, and a fair value of $1,700,000

LION also received $170,000 in cash at the time of formation, for its 65% share.

During 2020, JAGUAR reported net income (after tax), of $1,000,000.

JAGUAR declared a dividend of $1,100,000 for 2020.

Required -

a) What is TIGERs realized gain that can be recognized arising from the transfer of TIGER's assets to JAGUAR?

b) What is the amount of the amortization of the unrealized gain for 2020 arising from the transfer of TIGER's assets?

c) What is LION's share of net income earned by JAGUAR?

d) What is the value of the "Investment in JAGUAR" account on the books of TIGER at the end of 2020?

Reference no: EM133025054

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