P Co acquired an 80% interest in S Co on 1/1/ 2020,when the book values of S assets and liabilities were equal to their fair values.The cost of the 80% interest was equal to 80% of the book value of S net assets.During 2020,P sold merchandise that cost $70,000 to S for $86,000.On 31/12/ 2020,three-fourths of the merchandise acquired from P remained in S inventory.Separate incomes (investment income not included) of the two companies are as follows:

P S

Sales Revenue 180,000 160,000

Cost of Goods Sold 120,000 90,000

Operating Expenses 17,000 21,000

Separate incomes 43,000 49,000

the year ended 31/12/2020 ,the realized income from intercompany sales?

Select one: a. $12,000 profit b. $ 4,000 profit c. $ 12,000 loss d. $ 4,000 loss