A parent owns two-thirds of the subsidiary’s equity. As at a year-end the subsidiary’s inventory includes goods sent to it by the parent invoiced at £360,000. Parent has purchased these goods for £300,000. Which of the following are the correct entries for eliminating unrealised profit?
(a) Debit the subsidiary’s retained earnings and credit the subsidiary’s inventory with £45,000
(b) Debit the parent’s retained earnings and credit the subsidiary’s inventory with £60,000
(c) Debit the subsidiary’s retained earnings and credit the subsidiary’s inventory with £60,000
(d) Debit the parent’s retained earnings and credit subsidiary’s inventory with £45,000