Penny Ltd, a reporting entity, acquired 100% of the issued shares of Lane Ltd on 1 July 2015. The transactions below represent intra-group transactions relevant to the consolidated financial statements for the 2020 (1 July 2019 to 30 June 2020) financial year. Both entities use the perpetual inventory method.

• During the year ended 30 June 2020, Lane Ltd sold goods to Penny Ltd for $280,000. These goods had cost Lane Ltd $120,000. At financial year-end, 40% of these goods remained in Penny Ltds inventory.

The company income tax rate is 30%.

Required:

Show the consolidation adjustment entries needed to eliminate the above intra-group transaction for financial year ended 30 June 2020 in accordance with AASB 10 Consolidated Financial Statements. If no entry is required, please provide a brief explanation why you believe a consolidation adjusting entry is not required.

• Include all narrations.
• Show all workings. Where workings are not shown, part marks will not be awarded.