Please explain how you do this.

Plesco Corporation acquired 80 percent of Slesco Corporation's voting common stock on January 1, 20X7. On January 1, 20X8, Plesco received $350,000 from Slesco for equipment Plesco had purchased on January 1, 20X5, for $400,000. The equipment is expected to have a 10-year useful life and no salvage value. Both companies depreciate equipment on a straight-line basis.

Based on the preceding information, in the preparation of consolidation entries related to the equipment transfer for the 20X8 consolidated financial statements, net effect on accumulated depreciation will be:

a decrease of $50,000.

an increase of $110,000.

a decrease of $160,000.

an increase of $120,000.