Dunn Corporation owns 100 percent of Grey Corporation’s common stock. On January 2, 2009, Dunn sold to Grey for $40,000 machinery with a carrying amount of $30,000. Grey is depreciating the acquired machinery over a five-year life by the straight-line method. The net adjustments to compute 2009 and 2010 consolidated net income would be an increase (decrease) of LO8 2009 2010

a. $(8,000)

b. $(8,000)

c. $(10,000)

d. $(10,000)

-0-

$2,000

-0-

$2,000

(AICPA adapted)