Green Ltd owns 100% of Arrow Ltd.During the financial year ending 30 June 2016, Green Ltd sold inventory, originally costing $98 000, to Arrow Ltd for $180 000. Arrow Ltd sold inventory, originally costing $120 000, to Green Ltd for $160,000. At year end 30 June 2016, Green Ltd has sold 40% of the inventory it purchased from Arrow Ltd outside the group, while Arrow Ltd still has 25% of the inventory it purchased from Green Ltd on hand. Tax rate is 30%.

(a) Why does this information create a elimination entry for consolidation purposes at year end?

(b) What is the consolidation/elimination entry at 30 June 2016?

(c) What is the consolidation/elimination entry for the item shown above at 30 June 2017?