To answer this question, the user needs to have a basic understanding of the layers of the OSI model and their functions.

The layer that handles the formatting of application data so that it will be readable by the destination system is the presentation layer.

Explanation of each option:

A. application: The application layer is responsible for providing network services to the user's applications. It is the highest layer of the OSI model and includes protocols such as HTTP, FTP, SMTP, and Telnet. It does not handle the formatting of application data.

B. presentation: The presentation layer is responsible for the formatting and representation of data. It is responsible for converting data into a format that is readable by the destination system. This layer is also responsible for data encryption and compression. Therefore, option B is correct.

C. transport: The transport layer is responsible for the reliable transfer of data between two devices. It provides services such as segmentation, error recovery, and flow control. It does not handle the formatting of application data.

D. network: The network layer is responsible for the routing of data between devices on different networks. It is responsible for data addressing and packet forwarding. It does not handle the formatting of application data.

E. data link: The data link layer is responsible for the reliable transfer of data between two devices on the same network. It provides services such as error detection and correction, flow control, and access to the physical layer. It does not handle the formatting of application data.

Therefore, the answer is: B. presentation.