Parent Ltd (Parent) controls a subsidiary Sub Ltd (Sub), in which it own 70% of the issued capital since 30Jjune 20X3. The following transactions are relevant for the preparation of the consolidated financial statements for the financial year ending 30 June 20X7.
Transaction 1 : During the financial year ending 30 June 20X4, Sub sold an item of plant to parent at a loss. Parent is still using the plant at 30 June 20X7.
Transaction 2: Sub paid an iterim dividend in August 20X5. Parent is exempt from income tax on dividends received from the subsidiary.
Transaction 3: During the financial year ending 30 June 20X7, Parent sold inventory to Sub for a price greater than its cost to Parent. One third of inventory is still on hand at 30June 20X7.
Transaction 4: On 1 November 20X6, Parent borrowed $50,000 from Sub at an interest rate of 10% per annum. The interest on the loan is payable every six months starting 1 May 20X7. The loan is still outstanding at 30June 20X7.
Which transaction would affect the calculation of the non-controlling interest in the consolidated profit for the financial year ended 30June 20X7?
A. Transaction 1
B. Transaction 2
C. Transaction 3
D. Transaction 4