On April 1 20x8, X ltd acquired 50% of the equity share capital of Y ltd and on that date X ltd made a 4 million load to Y ltd with no interest.

What will be the effect on the Y ltd's retained earnings at the year-end date of 31 December 20x8 when this intragroup transaction is canceled.

a) Y ltd retained earnings will be reduced by 500,000

b) there will be no effect

c) Y ltd retained earnings will increase by 300,000

d) Y ltd retained earnings will be reduced by 300,000