Pardolate Corporation paid $200,000 for a 60% interest in Arthropod Inc on January 1, 2005, when Arthropod had Capital Stock of $200,000 and Retained Earnings of $100,000. Fair values of identifiable net assets were the same as recorded book values. During 2005, Arthropod had income of $30,000; declared dividends of $10,000 and paid $5,000 of dividends. On December 31, 2005, Pardolate will have Investment in Salem account of $240,000. Investment in Salem account of $218,000. Goodwill of $20,000. Dividends receivable of $3,000.

Jabiru Corporation purchased a 20% interest in Fish Company common stock on January 1, 2002 for $300,000. This investment is accounted for using the complete equity method and the correct balance in the Investment in Fish account on December 31, 2004 is $440,000. The original excess purchase transaction included $60,000 for a patent amortized at a rate of $6,000 per year. In 2005, Fish Corporation has net income of $4,000 per month earned uniformly throughout the year and pays $20,000 of dividends in May. If Jabiru sells one-half of its investment in Fish on August 1, 2005 for $500,000, how much gain will be recognized on this transaction?

$278,950

$280,000

$280,950

$282,000

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