10.8 Substance over form LO6, 7 Greenvale Ltd sold some property to Thornleigh Ltd for $1 000 000 cash in June 2020, recording a profit of $200 000. A further element of the sale was that Greenvale Ltd gave Thornleigh Ltd an option to sell the property back to Greenvale Ltd at any time after 30 June 2020, the end of Greenvale Ltds reporting period, for $1 000 000. If Thornleigh Ltd exercised the option, there would be no cash flow to Thornleigh Ltd from Greenvale until two years had passed. The land has a current fair value of $800 000 with no changes expected in this amount in the next three years.

(a) Discuss the appropriate accounting treatment of this transaction in the accounting records of Greenvale Ltd. Ignore GST.