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Prepare the consolidation adjustment entry

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Reference no: EM132553887

During the year to 30 June 2020, a parent entity (Jay Ltd) sold inventories to its subsidiary entity (Kay Ltd) at a profit of $22 000. The goods had originally cost Jay $50 000. At 30 June 2020 all the inventories were still on hand as Kay had not sold any.

Ignore tax.

Required

Question i) Prepare the consolidation adjustment entry/ies to deal with this transaction for the 30 June 2020 consolidation. Explain why it is necessary to make these adjustments on consolidation.

Reference no: EM132553887

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