(a) On 1 July 2019 Manila Ltd sold an item of plant to Tokyo Ltd for $600,000 when its carrying value in Manila Ltd book was $800000 (costs $1200,000, accumulated depreciation $400,000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent.

Required:

a) Pass the necessary entry in 30 June 2020 to eliminate the intra-group transfer of equipment.

b) How will the profit or loss arising out of the intra-group transfer of depreciable asset be recognised? Explain with an example