Fearless, Inc. owns 100% of the outstanding stock of Hyena, Inc.

On January 1, 2021, Fearless sells a machine with a book value of $400,000 to Hyena for $430,000. Fearless had originally acquired the machine from an outside party. The subsidiary places the machine in service and depreciates the asset using the straight-line method over a five year life with no salvage value.