_____ on 1/2/06, Palex Sold Equipment Costing $100,000 to Its

_____ On 1/2/06, Palex sold equipment costing $100,000 to its 100%-owned subsidiary, Salex, for $75,000. At the time of the sale, the equipment had been 60% depreciated (using the straight-line method and an assigned life of 10 years) . Salex continued depreciating the equipment by using the straight-line method but assigned a remaining life of 5 years.
What is the amount of the intercompany profit or loss that must be deferred at 12/31/06?

A) $-0-
B) $7,000
C) $8,750
D) $26,250
E) None of the above.