Panner, Inc., owns 40 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $137600 and then sells it to Watkins for $172,000. At the end of the year, Watkins still holds only $29,50O of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method? Multiple Choice $10,160. $7160 $2.360. $12,560