Scratch Ltd purchased equipment on 1 July 2018 for $50,000.The estimated useful life of the equipment at acquisition date was 4 years and the residual value was $6,000. Scratch Ltd uses straight line depreciation on equipment. The reporting period ends 30 June.

Scratch sold the equipment on 1 January 2021 for $30,000.

After recording all the necessary journal entries on 1 January 2021, the overall impact these entries had on profit for the year ended 30 June 2021 is:

Select one:

a.

a decrease of $2,500.

b.

an increase of $2,500.

c.

a decrease of $3,000.

d.

an increase of $25,000.