On December 31, Year 4, Prone Inc. sold a piece of equipment to it's 90% owned subsidiary, Supine Co. Details are as follows:
Original Purchase Date : Jan 1, Year 1
Original cost to Prone: $65,000
Original estimate of salvage value: $10,000
Original estimate of economic life: 5 years
Intercompany selling price $60,000
Supine's estimate of remaining economic life: 4 years
Supine's estimate of salvage value: $5,000
Both companies use straight-line depreciation. In preparing consolidated financial statements for Year 4, how much intercompany gain will Prone have to eliminate?
-$31,590
-$35,100
-$49,000
-$39,000
