On 1 July 2010 Davis Ltd acquired all the share capital in Mitchell Ltd for $230,000 cash. At the date of acquisition Mitchell Ltd had a dividend payable of $40,000. The shares in Mitchell Ltd were acquired cum-dividend. As at the date of acquisition the balance sheet of Mitchell Ltd showed the following: $ Share capital 100,000 General reserve 35,000 Retained earnings 45,000 All of the identifiable assets and liabilities of Mitchell Ltd were recorded at fair value except for the following: Carrying amount Fair value Inventory $20,000 $45,000 Machinery (Cost $150,000) 40,000 100,000 Contingent liability Nil 5,000 The inventory was all sold by 30 June 2011. The machinery has a further 10 year useful life. The contingent liability was settled for $4,000 during the 2011 financial year. All fair value adjustments are performed on consolidation. The tax rate is 30%. On 30 June 2012, the consolidation entry required to the revalued inventory is:

a. Dr Inventory $25,000; Cr BCVR $17,500; Cr Deferred tax liability $7,500

b. Dr COGS $25,000; Cr BCVR $17,500; Cr Income tax expense $7,500

c. Dr COGS $25,000; Cr BCVR $17,500; Cr Deferred tax liability $7,500

d. Dr Retained earnings $17,500; Cr BCVR $17,500

e. Dr Retained earnings $25,000; Cr BCVR $17,500, Cr Deferred tax liability $7,500