Polakow Inc. (Polakow) and Naish Inc. (Naish) formed a joint venture called PN Ventures Ltd. (PN) on January 1, 2011. Polakow invested Plant and Equipment with a book value of $1,700,000 and a Fair Value of $2,400,000 for an 80% interest in PN Ventures Ltd. Polakows Plant and Equipment was estimated to provide an additional 8 years of utility to PN. Naish contributed assets with a fair value of $600,000 (book value $400,000) for its 20% stake in PN. In 2011 PN reported net income of $250,000. Assume that the significant benefits and risks were not transferred when Polakow transferred the equipment to the JV.