The Blue Company owns 25% of the Yellow Company. At 31 December 20X2, Blue holds inventory acquired from Yellow Company during 20X2, at an amount of 250,000. The cost to Yellow Company was 170,000. The Blue Companys consolidated financial statements have been drafted without any adjustment in relation to this holding of inventory. According to IAS 28, which adjustment should be considered in the Blue Companys consolidated balance sheet at 31 December 20X2 in determining the inventory and operating profit?

Inventory reduced by 250,000 and operating profit reduced by 170,000

Inventory reduced by 20,000 and operating profit reduced by 20,000

Inventory reduced by 170,000 and operating profit reduced by 170,000

Inventory reduced by 250,000 and operating profit reduced by 250,000