On January 1, 2017, Max Company, an 70% owned subsidiary of cooper, Inc., transferred equipment with a 10-year life (six of which remain with no salvage value) to cooper in exchange for $90,000 cash. At the date of transfer, Max's records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000. Straight-line depreciation is used. Max reported net income of $28,000 and $32,000 for 2017 and 2018, respectively. All net income effects of the intra-entity transfer are attributed to the seller for consolidation purposes.

1) What amount of gain should be reported by Max Company relating to the equipment for 2017 prior to making consolidating entries?

2) Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers, what amount of this gain should be recognized for consolidation purposes for 2017?

3) For consolidation purposes, what net debit or credit will be made for the year 2017 relating to the accumulated depreciation for the equipment transfer?

4) What is the net effect on net income as a result of consolidating adjustments made in 2017 with respect to the equipment transfer?

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