Pepe, Incorporated acquired 60% of Devin Company on January 1, 2017. On that date Devin sold equipment to Pepe for $45,000. The equipment had a cost of $120,000 and accumulated depreciation of $66,000 with a remaining life of 9 years. Devin reported net income of $300,000 and $325,000 for 2017 and 2018, respectively. Pepe uses the equity method to account for its investment in Devin.What is the consolidated gain or loss on equipment for 2017?
A. $21,000 loss.
B. $21,000 gain.
C. $0.
D. $9,000 gain.
E. $9,000 loss.
Answer: C
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