1) Okeefe Corporation purchased a 20% interest in Fago Company common stock on January 1, 2008 for $300,000. This investment was accounted for using the complete equity method and the correct balance in the Investment in Fago account on December 31, 2010 was $440,000. The original excess purchase transaction included $60,000 for a patent amortized at a rate of $6,000 per year on Okkeefes books. In 2011, Fago Corporation had net income of $8,000 per month earned uniformly throughout the year and paid $30,000 of dividends in May. If Okeefe sold one-half of its investment in Fago on August 1, 2011 for $400,000. How much gain was recognized on this transaction? (use the grid below for your answer)

Dec 31, 2010 investment balance
add: Okeefe's 20% interest in Fagos income from Jan 1-July 31 (7 months):
Less: Okeefes 20% share of Dividends
Less: Seven months of patent amortization:
= Investment account balance at July 31, 2011
Amount received from sale:
Minus: Book value of one-half interest
Gain on sale