Question
Corporate Accounting 17. Head Ltd owns all of the shares of Bill Ltd. In relation to the following intergroup transaction, select the correct consolidation worksheet
Corporate Accounting
17. Head Ltd owns all of the shares of Bill Ltd. In relation to the following intergroup transaction, select the correct consolidation worksheet adjusting entries for preparation of the consolidated financial statements as at 30 June 2020. Assume an income tax rate of 30%. Head Ltd sold inventory to Bill Ltd on 1 September 2019 for $80 000, the inventory costs Head Ltd $40 000. One fourth of the inventory was sold by Bill Ltd to GAP Ltd
Select one:
a. Dr Cost of sales $50,000, Dr Inventory $30,000, Cr Sales revenue 80,000, No tax effects.
b. Dr Cost of sales $50,000, Dr Inventory $30,000, Cr Sales revenue 80,000, Dr Deferred tax asset $9,000, Cr Income tax expenses $9,000
c. Dr Cost of sales $50,000, Dr Inventory $30,000, Cr Sales revenue 80,000, Dr Income tax expenses $9,000, Cr Deferred tax asset $9,000
d. Dr Sales revenue 80,000, Cr Cost of sales $50,000, Cr Inventory $30,000, Dr Deferred tax asset $9,000, Cr Income tax expenses $9,000
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