Entity X plans the conversion to IFRS with a reporting date of December 31, 2020, and a transition date of January 1, 2019. Entity X acquired a building a number of years ago for $90,000. According to local GAAP, the accumulated depreciation on the building as of January 1, 2019, was $30,000. However, under component depreciation (which is required under IFRS), the accumulated depreciation would have been $42,000 on January 1, 2019. Which of the following accounting entries would be required on Entity Xs transition date balance sheet?

a. Debit Impairment Loss for $12,000, debit Accumulated Depreciation for $30,000 and credit Building for $42,000

b. Debit Accumulated Depreciation-$30,000 and Credit Retained Earnings for $30,000 to reinstate the asset to the original historical cost

c. No entry is required, assuming that the company elects to use the IFRS 1 optional exemption to grandfather the local GAAP accounting for property plant and equipment.

d. Debit Retained Earnings for $12,000 and credit Accumulated Depreciation $12,000