Latner owns 80% of the common shares of Satler. On January 1, 20X4, Satler sold equipment to Latner for $50,000 that had a book value on that date of $40,000. The equipment has a remaining useful life of four years. In year 20X7, what journal entry would Latner under the equity method for the realized portion of the gain on equipment, assuming a tax rate of 40%? Multiple choice question. 

Credit Equity Method Income $10,000; Debit Investment in Satler $10,000 Debit Cash $1,200; 

Credit Equity Method Income $1,200 Debit Investment in Satler $1,200; 

Credit Equity Method Income $1,200 Debit Investment in Satler $2,500; 

Credit Equity Method Income $2,500

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