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QUESTION 2 - Total of 15 marks (a) Briefly outline the principle for determining when the profit or loss on an intra-group transaction can be recognised by the group

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QUESTION 2 - Total of 15 marks (a) Briefly outline the principle for determining when the profit or loss on an intra-group transaction can be recognised by the group. Provide an example to demonstrate the principle. (2 marks) (b) On 1 April 2008, Parent Lid commenced renting an office from its subsidiary at $500 per month. At 30 June 2008, Parent Lid owed one month of rent. Required: Prepare the adjusting journal entries required for the preparation of the consolidation worksheet at 30 June 2008. (2 marks) (c) On 23 June 2008, Subsidiary Lid sold inventory which cost $10 000 to Parent Lid for $20 000. By 30 June 2008, Parent Lid had sold half of the inventory to external parties. The remainder was sold during July 2008. The tax rate is 30%. Required: Prepare the adjusting journal entries required for the preparation of the consolidation worksheet at 30 June 2008. Show all calculations. (3 marks) () Explain the rationale for each of your entries in (c)(i) above. (6 marks) (Ci) Prepare the adjusting journal entries required for the preparation of the consolidation worksheet at 30 June 2009. Show all calculations. (2 marks) (Total marks question 2: 2 + 2 + 3 + 6 + 2 = 15 marks)