In Year 1, Ferguson Company purchased land for $120,000 to use as a future site for its new office building. At the end of Year 1, the land was worth $135,000. The company decided not to build the new office and sold the land for $132,000 cash in 2020. How does Ferguson Company's sale of the land affect its 2020 income statement?

a)

Decrease in gross margin of $3,000

b)

Increase in gross margin of $12,000

c)

Loss on the sale of land $3,000

d)

Gain on the sale of land $12,000