Octopus bought a car on 1 January 20X0 for $20,000 and decided to depreciate it at 30% per annum on a reducing balance basis. It was disposed of during the year ended 31 December 20X2 for $12,000. Octopus does not charge depreciation in the year of disposal.

What is the net effect on the statement of profit or loss for the year ended 31 December 20X2?

Group of answer choices

Increase of $12,000

Decease of $2,200

Increase of $2,200

Decrease of $12,000