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

Section: Chapter Questions

Problem 1Q

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