Lewis Inc. owns 40% of Morgan and applies the equity method. During the current year, Lewis buys inventory costing $400,000 and sells it to Morgan for $700,000. At the end of the year, Morgan still holds $140,000 of this merchandise. What amount of unrealized gross profit must Lewis defer in reporting this investment using the equity method?
A. $24,000
B. $56,000
C. $60,000
D. $140,000
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