Ali Ltd sold an item of plant to its subsidiary Baba Ltd on 1 January 2017 for $100,000. At that time the remaining useful life of the plant was assessed at 5 years. The asset had cost Ali Ltd $120,000 when acquired on 1 January 2015. The residual value of the plant is zero. Both companies use the straight-line depreciation method. The adjustment necessary on consolidation as at 30 June 2018 in relation to the sale of plant will result in:

Select one:

A. an increase in retained earnings (opening balance) and an increase in current year profit.

B. an increase in retained earnings (opening balance) and a decrease in current year profit.

C. a decrease in retained earnings (opening balance) and an increase in current year profit.

D. a decrease in retained earnings (opening balance) and a decrease in current year profit.