French Ltd purchased 100% of the issued capital of Pastry Ltd for a cash consideration of $2.1 million on 1 July 2015.At that time the fair value of the net assets of Pastry Ltd were represented by:

\begin{array} { | l | r | } \hline \text { Share capital } & \$ 1700000 \\\hline \text { Retained earnings } & 300000 \\\hline & \$ 2000000 \\\hline\end{array}

Goodwill had been determined to have been impaired by $5000 during the period.During the period ended 30 June 2016 Pastry Ltd sold inventory that cost $190 000 for $300 000 to French Ltd.Sixty per cent of this inventory remains on hand in French Ltd at the end of the year.Both companies use a perpetual inventory system.The taxation rate is 30%.
What consolidation journal entries are required for the period ending 30 June 2016?
A)

\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Share capital } & 1700000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 300000 & \\\hline \mathrm { Dr } & \text { Goodwill } & 95000 & \\\hline \mathrm { Cr } & \text { Investment in Pastry Ltd } & & 2095000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Sales } & 300000 & \\\hline \mathrm { Cr } & \text { Cost of goods sold } & & 190000 \\\hline \mathrm { Cr } & \text { Unrealised profit } & & 110000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Cost of goods sold } & 66000 & \\\hline \mathrm { Cr } & \text { Unrealised profit } & & 66000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Income tax expense } & 19800 & \\\hline \mathrm { Cr } & \text { Deferred tax asset } & & 19800 \\\hline\end{array}

\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Share capital } & 1700000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 300000 & \\\hline \mathrm { Dr } & \text { Goodwill } & 100000 & \\\hline \mathrm { Cr } & \text { Investment in Pastry Ltd } & & 2100000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Sales } & 300000 & \\\hline \mathrm { Cr } & \text { Cost of goods sold } & & 300000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Cost of goods sold } & 44000 & \\\hline \mathrm { Cr } & \text { Inventory } & & 44000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Deferred tax asset } & 13200 & \\\hline \mathrm { Cr } & \text { Income tax expense } & & 13200 \\\hline\end{array}

\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Share capital } & 1700000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 300000 & \\\hline \mathrm { Dr } & \text { Goodwill } & 100000 & \\\hline \mathrm { Cr } & \text { Investment in Pastry Ltd } & & 2100000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Impairment loss } & 5000 & \\\hline \mathrm { Cr } & \text { Accumulated impairment loss } & & 5000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Sales } & 300000 & \\\hline \mathrm { Cr } & \text { Cost of goods sold } & & 300000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Cost of goods sold } & 66000 & \\\hline \mathrm { Cr } & \text { Inventory } & & 66000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Deferred tax asset } & 19800 & \\\hline \mathrm { Cr } & \text { Income tax expense } & & 19800 \\\hline\end{array}

\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Share capital } & 1700000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 300000 & \\\hline \mathrm { Dr } & \text { Goodwill } & 100000 & \\\hline \mathrm { Cr } & \text { Investment in Pastry Ltd } & & 2100000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Impairment loss } & 5000 & \\\hline \mathrm { Cr } & \text { Accumulated impairment loss } & & 5000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Sales } & 300000 & \\\hline \mathrm { Cr } & \text { Purchases } & & 300000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Cost of goods sold } & 44000 & \\\hline \mathrm { Cr } & \text { Purchases } & & 44000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Deferred tax asset } & 13200 & \\\hline \mathrm { Cr } & \text { Income tax expense } & & 13200 \\\hline\end{array}

Intragroup Sales of Non-Current Assets Results in the Need to Eliminate

True/False

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