Dunn Corporation owns 100 percent of Grey Corporation's common stock. On January 2, 2012, Dunn sold to Grey $40,000 of machinery with a carrying amount of $30,000. Grey is depreciating the acquired machinery over a five-year life by the straight-line method. The net adjustments to compute 2012 and 2013 consolidated net income would be an increase (decrease) of

__ 2012____________________ 2013

a. $(8,000) ............................$2,000

b. $(8,000) .............................. -0-

c. $(10,000) ...........................$2,000

d. $(10,000) .............................-0-

(AICPA adapted)