On 1 July 2021, Parent Ltd. acquired all the share capital of Sub Ltd.

1. On 1 November2022, Sub Ltd. borrowed $128,000from Parent Ltd. at an annual interest rate of 4.8%. The term of the loan was for a 2-year interest-only loan with interest payable annually. On 30 June 2023, all interest was paid.
2. On 1 October 2022, Sub Ltd. sold a machine to Parent Ltd. for $140,000 cash. The machine had originally cost $80,000 and had a carrying amount of $20,000 at the time of the sale. Parent Ltd. depreciates the asset at 10% per annum using a straight-line approach with an estimated $5,000 residual value. Sub Ltd. had been depreciating the asset at 5% per year on a straight-line basis with no residual value.

Prepare the adjustment entries.

The tax rate is 30%.

The depreciation method is straight-line.