Hello, I need help with this case please:

Question

All Star Cards and Bubble Gum Cards recently formed a New Company “Baseball Trading Cards” in order to combine their respective wholly-owned baseball trading card business. In connection with the formation of Baseball Trading Cards, All Star contributed its business in exchange for a 50%equity interest and $85 million in cash. Bubble Gum contributed its business and $105 million in cash in exchange for a 50% equity interest; $20 million of the cash contributed by Bubble Gum remained in Baseball Trading Cards for working capital purposes.

The fair value and book value of the business contributed by All Star is $650 million and $40 million, respectively, with fair value determined based on an independent, third-party valuation. All Star has no actual or implied commitment, financial or otherwise, to support the operations of Baseball Trading in any manner.

Baseball Trading is owned, operated, and jointly controlled by All Star and Bubble Gum as a separate, specific business for the mutual benefit of each party. Both All Star and Bubble Gum participate in the overall management of Baseball Trading Cards, and significant decisions require the consent of both parties so that neither All Star nor Bubble Gum has unilateral control. As a result, Baseball Trading Cards meets the definition of a joint venture in paragraph 3(d) of Accounting Principles Bulleting Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. Furthermore, the group of assets contributed by All Star and Bubble Gum meets the definition of a business as defined in EITF Issue No. 98-3, Determining Whether a Nonmonetary Transaction Involves receipt of productive assets or of a business.

Required: May All Star recognize a gain upon the contribution of its business in exchange for a 50% equity interest in Baseball Trading Cards and $85 million in cash? If gain recognition is appropriate, how should the gain be calculated? What journal entry should All Star record to reflect the contribution of its business in exchange for a $50 equity interest in Baseball Trading Cards and $85 million in cash?