a)

During the year ended 30 June 2020, a parent entity rents a warehouse from a subsidiary entity for $100,000. The company tax rate is 30%. The consolidation adjustment entry needed at reporting date is:

		DR Rent revenue $100,000 CR Rent expense $100,000
		DR Rent revenue $100,000 CR Rent expense $100,000 DR Deferred tax asset $30,000 CR Income tax expense $30,000
		DR Rent expense $100,000 CR Rent revenue $100,000
		DR Rent revenue $100,000 CR Rent expense $100,000 DR Income tax expense $30,000 CR Deferred tax liablity $30,000

b)

During the year Ragna Pty Ltd, a subsidiary entity sold inventory to its parent entity, Rock Ltd, at a profit of $8,000. The goods had originally cost the subsidiary $20,000. At the end of the year all the inventory was still on hand. The adjustment entry to deal with this transaction on consolidation would include the following line item:

		CR Cost of sales $8,000.
		CR Cost of sales $28,000.
		CR Cost of sales $12,000.
		CR Cost of sales $20,000.