On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for $ 40,000. At the time of the transfer, the asset had an original cost (to Republic) of $60,000 and accumulated depreciation of $25,000. The equipment has a five-year estimated remaining life.

Barre reported net income of $250,000, $ 270.000 and $310,000 in 2020, 2021, and 2022, respectively Republic received dividends from Barre of $ 90,000, $105.000 and $ 120,000 for 2020, 2021, and 2022, respectively

What was the amount of the gain or loss on the sale of equipment reported by Republic on its pre- consolidation income statement in 2020?

a. $-0-

b. $ 5,000 gain

c. $20,000 loss

d. $35,000 gain