1. Company A sold an item of plant for a fair value of $80 million on 1 April 20X4. The plant had a carrying amount of $60 million at the date of sale, which was charged to cost of sales. On the same date, Company A entered into an agreement to lease back the plant for the next five years (being the estimated remaining life of the plant) at a cost of $20 million per annum payable annually in arrears. An arrangement of this type is normally deemed to have a financing cost of 10% per annum. The annuity discount factor for 5 years and 10% is 3. 50. At the same time, company A's trial balance shows a debit balance of $3 million, brought forward on current tax and a credit balance of $7 million on deferred tax. The tax charge for the current year is estimated at $21 million and the carrying amounts of net assets are $15 million in excess of their tax base. The income tax rate is 30%. Required: (1) What is the profit on disposal of the sale and lease back transaction?? (5) (2) What amount will be shown as income tax in the statement of profit or loss for the year? (5) 1. Company A sold an item of plant for a fair value of $80 million on 1 April 20X4. The plant had a carrying amount of $60 million at the date of sale, which was charged to cost of sales. On the same date, Company A entered into an agreement to lease back the plant for the next five years (being the estimated remaining life of the plant) at a cost of $20 million per annum payable annually in arrears. An arrangement of this type is normally deemed to have a financing cost of 10% per annum. The annuity discount factor for 5 years and 10% is 3. 50. At the same time, company A's trial balance shows a debit balance of $3 million, brought forward on current tax and a credit balance of $7 million on deferred tax. The tax charge for the current year is estimated at $21 million and the carrying amounts of net assets are $15 million in excess of their tax base. The income tax rate is 30%. Required: (1) What is the profit on disposal of the sale and lease back transaction?? (5) (2) What amount will be shown as income tax in the statement of profit or loss for the year