Penny Ltd, a reporting entity, acquired 100% of the issued shares of Lane Ltd on 1 July 2016. The transactions below represent intra-group transactions relevant to the consolidated financial statements for the 2020 (1 July 2019 to 30 June 2020) financial year. Both entities use the perpetual inventory method. • During the year ended 30 June 2020, Lane Ltd sold goods to Penny Ltd for $225,000. These goods had cost Lane Ltd $150,000. At financial year-end, 25% of these goods remained in Penny Ltd's inventory. The company income tax rate is 30%. Required: Show the consolidation adjustment entries needed to eliminate the above intra-group transaction for financial year ended 30 June 2020 in accordance with AASB 10 Consolidated Financial Statements. If no entry is required, please provide a brief explanation why you believe a consolidation adjusting entry is not required. • Include all narrations.

Penny Ltd, a reporting entity, acquired 100% of the issued shares of Lane Ltd on 1 July 2016. The transactions below represent intra-group transactions relevant to the consolidated financial statements for the 2020 (1 July 2019 to 30 June 2020) financial year. Both entities use the perpetual inventory method. • During the year ended 30 June 2020, Lane Ltd sold goods to Penny Ltd for $225,000. These goods had cost Lane Ltd $150,000. At financial year-end, 25% of these goods remained in Penny Ltd's inventory. The company income tax rate is 30%. Required: Show the consolidation adjustment entries needed to eliminate the above intra-group transaction for financial year ended 30 June 2020 in accordance with AASB 10 Consolidated Financial Statements. If no entry is required, please provide a brief explanation why you believe a consolidation adjusting entry is not required. • Include all narrations.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question

Penny Ltd, a reporting entity, acquired 100% of the issued shares of Lane Ltd on 1 July 2016. The transactions below represent intra-group transactions relevant to the consolidated financial statements
for the 2020 (1 July 2019 to 30 June 2020) financial year. Both entities use the perpetual inventory method.
During the year ended 30 June 2020, Lane Ltd sold goods to Penny Ltd for $225,000. These goods had cost Lane Ltd $150,000. At financial year-end, 25% of these goods remained in Penny Ltd's
inventory.
The company income tax rate is 30%.
Required:
Show the consolidation adjustment entries needed to eliminate the above intra-group transaction for financial year ended 30 June 2020 in accordance with AASB 10 Consolidated Financial
Statements.
If no entry is required, please provide a brief explanation why you believe a consolidation adjusting entry is not required.
• Include all narrations.

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