Reference no: EM132572718
Question - Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities:
On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000.
During the 2016-17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The tax rate is 30%.
Required -
(i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intra-group transfers of inventory.
(ii) Find the amount of cost of goods sold to be reported in the consolidated income statement for 2017 relating to the relevant intra-group sales.
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