Kateri Ltd Sold an Item of Plant to Its Subsidiary

Multiple Choice

Kateri Ltd sold an item of plant to its subsidiary, Patrick Ltd, on 1 January 2022 for $50 000. The asset had cost A Ltd $60 000 and had a useful life of 6 years when acquired on 1 January 2020 from an external party. The adjustment necessary on consolidation in relation to the transfer of plant as at 30 June 2023 will result in:

A) a decrease in retained earnings and a decrease in current year profit.
B) an increase in retained earnings and a decrease in current year profit.
C) a decrease in retained earnings and an increase in current year profit.
D) an increase in retained earnings and an increase in current year profit.