Tammam Ltd Is the Parent of Shud Ltd B) C)

Multiple Choice

Tammam Ltd is the parent of Shud Ltd.On 1 January 20X3 Tammam sold inventory to Shud for $20 000.The profit margin on this inventory was $5 000.As of end of financial year, June 30, Shud still held all of this inventory.The tax rate is 30%.
Which is the correct set of consolidation elimination entries for June 30 20X3 in respect of the inventory? This answer includes any tax-effect entries.

A) $\begin{array}{lrr}\text { Accounts } & \text { Debit \$ } & \text { Credit \$ } \\\text { Sales } & 20000 & \\\text { Cost of sales } & & 20000 \\\text { Cost of sales } & 5000 & \\\text { Inventory } & & 5000 \\\text { Deferred tax asset } & 1500 & \\\text { Deferred tax revenue } & & 1500\end{array}$

B) $\begin{array}{llcc} \text { Sales } & 15000 \\ \text { Cost of sales} &&15000\\ \text { Deferred tax asset} &1500\\ \text { Deferred tax revenue} &&1500\\\end{array}$

C) $\begin{array}{llcc} \text { Sales } &20000 \\ \text { Cost of sales} &&20000\\ \text { Deferred tax asset} &1500\\ \text { Deferred tax revenue} &&1500\\\end{array}$


D) $\begin{array}{lrr}\text { Sales } & 20000 \\\text { Impairment expense-inventory } & 5000 & \\\text { Cost of sales } & & 25000 \\\text { Deferred tax revenue } & 1500 & \\\text { Deferred tax liability } & & 1500\end{array}$