On 1 July 2019, Canola Ltd acquired 100% of the share capital to gain control of Palm Ltd. The following intra-group transactions occurred during the financial year ending 30 June 2020.

(i) During the 2019 - 2010 financial year, Canola Ltd sold inventory to Palm Ltd for $1,000,000. Canola Ltd purchased this inventory at $700,000. By 30 June 2020, Palm Ltd has sold 70% of that inventory to an outside third party.

(ii) Palm Ltd sold a vehicle to Canola Ltd for $100000. The vehicle had been fully depreciated by Palm Ltd at 30 June 2020 and valued at $0 on Palms books.

Required:

1. Prepare the journal entries required to eliminate the intra-group transactions above. Ignore any tax effects. (6 marks)
2. When are consolidated profits recorded for inventory transfers within the group? (1 mark)