Base Inc. (Base) and Space Ltd. (Space) formed a joint venture, Moon Ltd., on January 1, 2023. Base invested plant and equipment with a book value of $300,000 and a fair value of $900,000 for a 30% interest in the joint venture. Base's plant and equipment were estimated to provide an additional 5 years of utility to Moon. Space contributed assets with a fair value of $2,100,000 for its 70% stake in Moon. Moon reported a net income of $2,800,000 for 2023. The transactions set out above were considered to have commercial substance.

Assuming the plant and equipment transferred by Base are used to generate a positive gross profit for Moon, what portion of the unrealized gain arising from the transfer of Base's assets is realized for 2023?

Nil

$10,800

$126,000

$36,000