At the date of acquisition a subsidiarys assets and liabilities are reported at amounts approximating in fair value except it has previously unreported identifiable assets of 30 million (5 year life straight line) and it's plant assets are overvalued by 40 million (10 years straight line). Revaluation write offs are reported as adjustments to operating expenses. Eliminating entry (O) At the end of the second year following acquisition

increase operating expense by 30 million

increase operating expense by 4 million

reduce operating expense By 30 million

increase operating expense by 2 million