On January $1,2014,$ Heavy Company sold used machinery to Lucky Company, accepting a $$45,000$

non$-$interest$-$bearing note maturing on January $1,2017.$ The machinery had originally cost Heavy

Company of $$86,000.$ On January $1,2014$ the machinery had accumulated depreciation of $$38,000.$ The

fair value of the machinery was not determinable at the time of sale; however, the risk adjusted fair

value interest rate for both companies was $12\%,$

With respect to this transaction Heavy should report a

a$.$ credit to gain on sale of equipment for $$15,970$

b$.$ debit to loss on sale of equipment for $$15,970$

c$.$ debit to loss on sale of equipment for $$5,970$

d$.$ credit to gain on sale of equipment for $$5,970$

e$.$ credit to note payable for $$45,000$