Pepper Ltd. (Pepper) owns 75\% of Sage Corp. (Sage) and uses the equity method to account for its investment. Pepper has a $240,0000 bond issue outstanding that pays 12% interest annually. Interest payment dates are June 30 and December 31 each year. The bonds were originally issued at a discount. The unamortized bond discount is $20,000. The bonds mature on January 1, 2033. On January 1,2023 , Sage purchased $120,000 par value, 12% bonds for $100,000. Straight line amortization is used to amortize the discount. Both companies have a December 31 year end. Intercompany bond gains and losses are to be allocated to each company. During 2023 , Sage earned a net income of $80,000 and paid dividends of $20,000. Which of the following is the correct pre-tax gain or loss to Sage on the intercompany purchase of the bonds? (3 marks) a. $40,000 loss b. $20,000 loss c. $20,000 gain d. Nil