A subsidiary entity sold inventory to a parent entity for $30 000 The inventory had previously cost the subsidiary entity $24 000 By reporting date, the parent entity had sold 75 of the inventory to a party outside the group The company tax rate is 30 The adjustment entry in the consolidation worksheet at reporting date is Question 6 options a) Sales revenue Dr 30 000 Cost of sales Cr 24 000 Inventory Cr 6 000 Deferred tax asset Dr 1 800 Income tax expense Cr 1 800 b) Sales revenue Dr 30 000 Cost of sales Cr 28 500 Inventory Cr 1 500 Deferred tax asset Dr 450 Income tax expense Cr 450 c) Sales revenue Dr 22 500 Cost of sales Cr 18 000 Inventory Cr 4 500 Deferred tax asset Dr 1 350 Income tax expense Cr 1 350 d) Sales revenue Dr 7 500 Cost of sales Cr 6 000 Inventory Cr 1 500 Deferred tax asset Dr 450 Income tax expense Cr 450

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Question: A subsidiary entity sold inventory to a parent entity for $30 000. The inventory had previously cost the subsidiary entity $24 000. By reporting date,

A subsidiary entity sold inventory to a parent entity for $30 000. The inventory had previously cost the subsidiary entity $24 000. By reporting date, the parent entity had sold 75% of the inventory to a party outside the group. The company tax rate is 30%. The adjustment entry in the consolidation worksheet at reporting date is:

Question 6 options:

Sales revenue

30 000

Cost of sales

24 000

Inventory

6 000

Deferred tax asset

1 800

Income tax expense

1 800

Sales revenue

30 000

Cost of sales

28 500

Inventory

1 500

Deferred tax asset

450

Income tax expense

450

Sales revenue

22 500

Cost of sales

18 000

Inventory

4 500

Deferred tax asset

1 350

Income tax expense

1 350

Sales revenue

7 500

Cost of sales

6 000

Inventory

1 500

Deferred tax asset

450

Income tax expense

450

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