1) Sun Limited is a subsidiary of Moon Limited. During the 2017 financial year, Sun Limited sold an item of machine to Moon Limited. This machine originally cost Sun Limited $10,000 to purchase. As part of the consolidation process, the following journal entries are provided:

31 December 2017

Dr Profit on sale of machine $2,000

Dr Machine $2,000

Cr Accumulated depreciation $4,000

What amount did Moon Limited pay Sun Limited for the machine?

1. $10,000
2. $8,000
3. $4,000
4. $6,000

Explain details and show calculation seps

2) A747 Limited and A767 Limited are subsidiaries of one economic entity. Both A747 Limited and A767 Limited are both separate legal entities required to prepare their own financial statements. During the 2017 financial year, A747 Limited sold A767 Limited an amount of inventory which cost $1,000 for $2,000. At the end of the 2017 financial year, A767 Limited has 60 percent of that inventory still on hand and the rest has been sold to an entity outside the economic entity.

At what amount should the inventory remaining in A767 Limited be recorded in the consolidated financial statement for the economic entity?

A.$2,000

B.$800

C.$1,200

D.$600

Explain details and show calculation seps