Kenny Ltd Holds a 60% Interest in Swan Ltd

Multiple Choice

Kenny Ltd holds a 60% interest in Swan Ltd. Kenny Ltd sells inventory to Swan Ltd during the year for $40 000. The inventories originally cost Kenny Ltd $32 000 when purchased from an external party. At the end of the year 50% of the inventories are still on hand. The tax rate is 30%. The NCI adjustment required in relation to this intragroup transaction is a debit to NCI of:

A) Nil.
B) $1 120
C) $2 240
D) $2 800