lilo owns 30% of Stitch and applies the equity method as there is the ability to exert signficant influence. During the current year, Stitch bought inventory costing $52,000 and then sold it to Lilo for $80,000. At year-end, all of the merchandise had been sold by Lilo to other customers. What amount of gross profit on intra-entity sales must be deferred by Lilo?

$28,000 $52,000. $80,000. $8,400. $0