On January 1, 2015, Smeder Company, an 80% owned subsidiary of Collins, Inc., transferred equipment to Collins in exchange for $84,000 cash. At the date of transfer, Smeder's records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000. The equipment has 6 years remaining useful life and zero salvage value. Straight-line depreciation is used. Smeder reported net income of $28,000 for 2015. All net income effects of the intra-entity transfer are attributed to the seller for consolidation purposes. a) Compute the gain recorded by Smeder Company relating to the equipment for 2015. b) How must net income of 2015 be adjusted to reflect the net effect on consolidated net income of the equipment transfer?