Question
A subsidiary entity sold inventory to a parent entity for $30 000. The inventory had previously cost the subsidiary entity $24 000. By reporting date,
A subsidiary entity sold inventory to a parent entity for $30 000. The inventory had previously cost the subsidiary entity $24 000. By reporting date, the parent entity had sold 75% of the inventory to a party outside the group. The company tax rate is 30%. The adjustment entry in the consolidation worksheet at reporting date is:
Question 6 options:
a)
Sales revenue
Dr
30 000
Cost of sales
Cr
24 000
Inventory
Cr
6 000
Deferred tax asset
Dr
1 800
Income tax expense
Cr
1 800
b)
Sales revenue
Dr
30 000
Cost of sales
Cr
28 500
Inventory
Cr
1 500
Deferred tax asset
Dr
450
Income tax expense
Cr
450
c)
Sales revenue
Dr
22 500
Cost of sales
Cr
18 000
Inventory
Cr
4 500
Deferred tax asset
Dr
1 350
Income tax expense
Cr
1 350
d)
Sales revenue
Dr
7 500
Cost of sales
Cr
6 000
Inventory
Cr
1 500
Deferred tax asset
Dr
450
Income tax expense
Cr
450
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