The correct option is B with a decreasing upward acceleration
Piece of wood will start moving up with an acceleration of a=g(ρ−σσ), where ρ is the density of water and σ is the density of wood. but as the velocity of wood increases, the viscous drag by the liquid will increase in the opposite direction. So its upward acceleration also decreases.
Note: should not be confused with deceleration. Deceleration means negative acceleration. but here in this case acceleration is positive and decreases to zero, until it reaches terminal velocity due to viscous drag.