Rainbow Ltd has control over Winnie Ltd. Rainbow sold an equipment to Winnie for $3,800,000 in January 20X5. The equipment was 3 years old when sold, and had cost Rainbow $4,500,000 to buy, with expected residual value $500,000. The residual value and remaining useful life of the equipment did not change. The equipment had been depreciated by Rainbow at 10% p.a. straight-line. The amount of the unrealised gain/loss on the sale was:

Select one:

A.

$700,000 gain

B.

$200,000 loss

C.

$500,000 gain

D.

$700,000 loss