A Ltd Sold an Item of Plant to B Ltd

Multiple Choice

A Ltd sold an item of plant to B Ltd on 1 January 20X7 for $25 000.The asset had cost A Ltd $30 000 when acquired on 1 January 20X5.At that time the useful life of the plant was assessed at 6 years.The adjustment necessary on consolidation in relation to the transfer of plant as at 30 June 20X8 will result in:

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