How provide consolidation adjustment entry for inter-entity

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Reference no: EM132826650

Zhang Ltd is the wholly-owned subsidiary of Lang Ltd. The following transactions occur between the two entities during the financial year ending 31 January 2021:

a) In 2020, Zhang Ltd sold Lang Ltd goods, which cost $40,000 for $60,000. At 31 January 2021, Lang Ltd. had not sold 40% of these goods.
b) In 2019, Lang Ltd sold Zhang Ltd goods, which cost $35,000 for $50,000. At 31 January 2021, Zhang Ltd. had not sold 20% of these goods.

Required:

Problem 1: Assuming a tax rate of 30%, provide consolidation adjustment entries for the inter-entity transactions to enable the preparation of the consolidated report for the year ending 31 January 2021.

Reference no: EM132826650

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