Shark Ltd is the parent entity to the wholly owned subsidiaries of Dolphin Ltd, Fish Ltd, and Guppy Ltd. On 1 July 2020 Shark Ltd sold a submarine to Fish Ltd for $400,000 cash. The original cost of the submarine was $600,000. Shark Ltd adopted an accounting policy whereby the submarine was being depreciated on a straight line basis over its useful life of 10 years. The carrying amount of the submarine in Shark Ltd s financial statements at the date of sale was $240,000. Subsequent to the transfer, Fish Ltd depreciated the submarine on a straight line basis over its remaining useful life of 4 years.

Explain why the adjustment for this transaction is necessary. (in less than 100 words).