Jay Inc. owns 80% of Tesla Inc. and uses the cost method to account for its investment. The 2020 income statements of both companies are shown below.

JayTeslaGross Profit$100,000$50,000Miscellaneous Revenues/Losses$30,000$20,000Depreciation Expense$20,000$15,000Income Tax Expense$20,000$6,000Net Income$30,000$9,000

On January 1, 2020, Tesla sold equipment to Jay at a profit of $3,000. The equipment had a remaining useful life of twenty years on that date. Both companies are subject to an effective tax rate of 40%.

The amount of gross profit appearing on Jay's 2020 Consolidated Income Statement would be:

Multiple Choice

• $150,000.
• $153,000.
• $147,600.
• $147,000.