Hello,
Sunny Inc. is a joint venture formed on January 1, 2013 by Palm Ltd. and Voice Corp. Palm transferred land with a net carrying value of $750,000 and a fair value of $1,875,000 to Sunny in return for a 40% interest in Sunny and cash consideration of $375,000. Voice contributed cash of $187,500 and other assets with a fair value of $2,062,500 for a 60% interest in Sunny. Sunny borrowed $650,000 from a bank to finance the start-up operations. Which one of the following amounts represents the gain on transfer of land to Sunny that Palm should recognize at the time of the transfer?
The correct answer to the quiz is 150000=120000+30000. What is 30000?
My calculations:
Cash Paid by Voice $187500
Financed by Sunny $187500
Voice portion of financing 60% $112500
Sale proceeds $187500+112500=$300000
Palm portion of financing 40% = $75000
Cash received by Palm $375000
Carrying value of Land 300000/1875000*750000=120000
Immediate gain = 300000-120000=180000
Cash 375000
Inv in Sunny 675000
Land 750000
Gain from trans L 180000
unrealized Gain (conr acc) 120000
Where could I miss 30000? Anybody?
Thank you,