Shine Ltd owns 90% of the share capital of THD Ltd.

In January 2017, Shine Ltd sells inventory to THD Ltd for $50 000 cash. This inventory had previously cost Shine Ltd $42 000, and remains unsold by THD Ltd at the end of the period. The income tax rate is 30%.

A junior accountant working for Shine Ltd recorded the following consolidation adjustment for 30 June 2017:

Please discuss whether the entries are correct.

Sales revenue Dr 50 000 Cr Cost of sales Inventories 42 000 8 000 Dr 2 400 Cr Deferred tax asset Income tax expense 2 400 NCI Dr Cir 560 NCI share of profit/loss 560