Water Co. owns 80% of the outstanding common stock of Fire Co. On December 31, Year 1, Fire sold equipment to Water at a price in excess of Fire's carrying amount, but less than its original cost. On a consolidated balance sheet at December 31, Year 1, the carrying amount of the (cost less accumulated depreciation) equipment should be reported at:

You receive a memo from the vice president of procurement responding to your query. he writes: “it will be very important to maintain product continuity. we have a large base of devoted customers. we want to make sure that the quality and key characteristics of island knight stay the same through this transition. talk to frank, our consulting professional perfumer, for more information about the cologne. seasonal variations in costs are the single most significant factor in our deciding to go with another supplier, so finding a way to limit that should be the top priority. the overall marginal costs and shipping costs are probably somewhat less significant. you may want to talk to cindy, the product manager for island knight, regarding pricing information about the product.” what is the best action to take next?