a) Prepare any necessary journal entries in the consolidation journal to adjust for this transaction during the year ended 30 June 20X2. Cost of goods sold → Income tax expense + Dr (Eliminate the intra-group revenue/expense on the sale before tax) Dr ⇒ → → Cr (Adjust for tax effects of elimination of intra-group transaction) b) Prepare any necessary journal entries in the consolidation journal to adjust for this transaction during the year ended 30 June 20X3. Dr Cr = (Eliminate impact of prior year's intra-group transaction)
a) Prepare any necessary journal entries in the consolidation journal to adjust for this transaction during the year ended 30 June 20X2. Cost of goods sold → Income tax expense + Dr (Eliminate the intra-group revenue/expense on the sale before tax) Dr ⇒ → → Cr (Adjust for tax effects of elimination of intra-group transaction) b) Prepare any necessary journal entries in the consolidation journal to adjust for this transaction during the year ended 30 June 20X3. Dr Cr = (Eliminate impact of prior year's intra-group transaction)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:a) Prepare any necessary journal entries in the consolidation journal to adjust for this transaction during the year ended 30 June 20X2.
Cost of goods sold
Dr
(Eliminate the intra-group revenue/expense on the sale before tax)
Dr
Income tax expense
→
Cr
(Adjust for tax effects of elimination of intra-group transaction)
b) Prepare any necessary journal entries in the consolidation journal to adjust for this transaction during the year ended 30 June 20X3.
Dr
Cr
C
(Eliminate impact of prior year's intra-group transaction)
Transcribed Image Text:Intra-group Transactions (C)
Parent Ltd owns 100% of Subsidiary Ltd. In the financial year ended 30 June 20X2, Subsidiary Ltd sold inventory to Parent Ltd. Details
regarding the transaction are as follows:
Cost to Subsidiary to produce inventory
Sale price of inventory to Parent Ltd.
Percentage of inventory still held by Parent Ltd at 30 June 20X2
Percentage of inventory still held by Parent Ltd at 30 June 20X3
Tax rate
$7500
$8000
10%
0%
30%
Round all your answers to the nearest dollar amount. If you believe no journal entry is required, select NULL for the account name, NA for
the Dr or Cr, and enter 0 for the amount. Do not leave the amount blank.
Do not enter dollar ($) signs or commas (i.e. enter 10000 not $10,000).
The description may be missing from some of the journal entries below. This is intentional. Where journal descriptions are provided, you
need to read them carefully and be sure your answers are consistent with the provided description.
REQUIRED:
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