Problem
On January 1, 2020, True Co., an 80% owned subsidiary of Honest Inc., transferred equipment with a 10-year life (six of which remain with no salvage value) to Honest in exchange for $84,000 cash. At the date of transfer, True's records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000. Straight-line depreciation is used. True reported net income of $28,000 and $32,000 for 2020 and 2021, respectively. All net income effects of the intra-entity transfer are attributed to the seller for consolidation purposes. What amount of gain should be reported by True Co. relating to the equipment for 2020 prior to making consolidating entries?