Provide consolidation adjustment entries for inter-entity

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Dig Ltd is the wholly owned subsidiary of Drill Ltd. The following transactions occur between the two entities during the financial year ending 31 December 2020:

a) In 2020, Dig Ltd sold Drill Ltd goods, which cost $20,000 for $40,000. At 31 December 2020, Drill Ltd. had not sold 40% of these goods.
b) In 2019, Drill Ltd sold Dig Ltd goods, which cost $25,000 for $40,000. At 31 December 2019, Dig Ltd. had not sold 20% of these goods.

Required:

Problem 1: Assuming a tax rate of 30%, provide consolidation adjustment entries for the above inter-entity transactions to enable preparation of the consolidated report for the year ending 31 December 2020.

Reference no: EM132672494

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