On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $220,000 in cash. The

equipment had originally cost $198,000 but had a book value of only $121,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method.

Ackerman reported $320,000 in net income in 2018 (not including any investment income) while Brannigan reported $104,600. Ackerman attributed any excess acquisition-date fair value to Brannigan’s unpatented technology, which was amortized at a rate of $4,200 per year.

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