On January 1, Year 1, A Limited and B Inc, formed A\&B Co, a joint...
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On January 1, Year 1, A Limited and B Inc, formed A\&B Co, a joint venture. B Inc, contributes equipment with a fair value of $1,500,000 and cash of $300,000 for its 60% interest in the venture. A Limited contributed a similar equipment with a carrying amount of $455,000 and a fair value of $800,000. A Limited received a 40% interest of A&BCO. only. The equipment has 10 years useful life when the asset was transferred to ABCC. Which of the following statement is true? a. A Limited can immediately recognize the gain on transfer of $345,000 b. A Limited will defer realizing the gain on transfer of $345,000 c. A Limited will defer realizing the gain on transfer of $138,000 (i.e. 40% of its ownership) d. Investment in A\&B will be reported as (net) $800,000
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