The following information pertains to a sale and leaseback
of equipment by Mega Co. on December 31, year 1:

Sales price $400,000

Carrying amount $300,000

Monthly lease payment $ 3,250

Present value of lease payments $ 36,900

Estimated remaining life 25 years

Lease term 1 year

Implicit rate 12%

What amount of deferred gain on the sale should Mega report at
December 31, year 1?

$0
$ 36,900
$ 63,100
$100,000