Question 5 Week 9 (11 marks) (a) Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000. These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows: Sales Cost of Sales Inventory Dr15 000 CF 13 000 Cr 2000 Deferred Tax Asset Dr Income Tax Expenser 300 300 Required (1) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the correct adjustment entry, (2.5 marks) (1) Determine the consolidation worksheet entries in the following year, assuming the inventory has been-sold, and explain the adjustments on a line-by-line basis. (1.5 marks) (b) On 1 duly 2016 Liala led sold an item of plant to Jordan Utd for $450000 when its carrying value in Liala Ltd book was $600000 (costs 5900000, accumulated depreciation 5300000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent Required: Pass the necessary entries on 30 June 2017 and 30 June 2018 to eliminate the intra-group transfer of equipment (7 marks)