What is John's portion of any unrealized gain or loss arising from the transfer of John's assets to Jinxtor on January 1, 2016?
A) Nil
B) $90,000
C) $210,000
D)$300,000

Question

Quizplus · Accepted Answer

According to the question, the assets that John transferred to Jinxtor had a fair value of $900,000 but a carrying value of $810,000. Therefore, there was an unrealized gain of $90,000 ($900,000 - $810,000). As per the accounting standards, the unrealized gain or loss arising from the transfer of assets remains with the seller (John, in this case) until the buyer (Jinxtor, in this case) sells or disposes of the assets. Hence, John's portion of the unrealized gain is $90,000.

What Is John's Portion of Any Unrealized Gain or Loss