Teeth Limited has a 100% holding in Hen Limited

Teeth Limited sold inventory to Hen Limited for $ 138 000 on 1st October 2019. This had been marked-up by 15% on cost. Hen Limited intended to use the inventory as plant which had a depreciation rate of 20% p.a.

Prepare the Consolidation Adjusting Journal Entries for the consolidated financial statements as at 30 June 2020 by adjusting for the earlier sale by reversing the sale proceeds and the cost of sales, and the reduction of income tax because of this transfer. Reduce the value of the asset, the deferred tax, the depreciation and the tax consequences of the depreciation reduction.