What the appropriate consolidation adjusting journal

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Problem 1: Wallaby Ltd, an ultimate parent reporting entity, holds a 30% interest in the voting shares of Wombat Ltd. Equity accounting is applied to the interest held in Wombat Ltd. During the second year of holding the investment Wombat Ltd sold some inventory to Wallaby Ltd at a selling price of $50,000. The cost of the inventory to Wombat Ltd was $32,000. Wallaby Ltd held 40% of the inventory on hand at the end of the second year. The appropriate consolidation adjusting journal, in respect of Wombat Ltd's sale of inventory will include the following entry:

a. Dr Share of associate's net profit after tax;
b. Cr Income tax expense.
c. Cr Inventory;
d. Dr Investment in Wombat Ltd;

Reference no: EM132911080

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