Pulp owned 80% of Fiction and 70% of Truth which it had acquired on 1 March 20X2.

On 1st June 20X6 Pulp disposed of half of its holding in Truth for proceeds of $1 million. The cost of Truth was $600K and at the date of acquisition the share capital of Truth was $100K, the reserves were $400K and the fair value of Truth's land was an extra $60K. The remaining holding (fair value $400,000) is to be dealt with as an associate.

On 28th February 20X6 Truth's total reserves were $600K and the profit for the year ended 28th February 20X7 was $200K.

Assume that profits accrue evenly throughout the year and that there has been no sale of land or increase in share capital since acquisition. Goodwill was capitalised and since acquisition $41,600 has been written off as impairment.

NCI at acquisition is valued at its proportionate share of net assets.

Calculate the gain on disposal of Truth to be shown in the consolidated accounts for the year ended 28th February 20X7.