Equipment was stolen from Far East Corp. on May 1, 2022. The cost of the equipment was $10,000 and the UCC was $7,500. The insurance proceeds of $12,000 were received on September 15, 2022 and replacement equipment was purchased for $11,500 on September 30, 2022. Far East makes all replacement property elections. Which of the following statements is correct?

a. The 2022 taxable capital gain is $1,000 and the deemed capital cost of the new equipment is $12,000.

b. The 2022 taxable capital gain is $250 and the deemed capital cost of the new equipment is $11,500.

c. The 2022 taxable capital gain is $250 and the deemed capital cost of the new equipment is $10,750.

d. The 2022 taxable capital gain is $250 and the deemed capital cost of the new equipment is $10,000.