Barkat Islamic Bank purchased an item of machinery for sale on Jan 2, 2022, for USD 10,000. The equivalent cash price of the machinery through a spot sales contract was USD 11,000. The machinery is to be sold at a markup of 25% on cost. The sales contract between the bank and the client was executed on Jan 3, 2022, for a period of five years. The first instalment payment is due on Dec 31, 2022, which is also the accounting period end of the bank. The total profit on this transaction of USD 2,500 will be:

a. Recognised entirely in the first year;

b. Spread equally over the five-year instalment period;

c. USD 1,000 will be recognised in the first year; USD 1,500 will be deferred and amortised over the contract term using the straight line method;

d. USD 1,000 will be recognised in the first year; USD 1,500 will be deferred and amortised over the contract term using the effective profit rate method.