Parent Ltd (Parent) controls a subsidiary Sub Ltd (Sub), in which it owns 70 per cent of the issued capital since 30 June 20X3. The following transactions are relevant for the preparation of the consolidated financial statements for the financial year ending 30 June 20X7. Transaction 1: During the financial year ending 30 June 20X4, Sub sold an item of plant to Parent at a loss. Parent is still using the plant at 30 June 20X7. Transaction 2: Sub paid an interim dividend in August 20X5. Parent is exempt from income tax on dividends received from the subsidiary. Transaction 3: During the financial year ending 30 June 20X7, Parent sold inventory to Sub for a price greater than its cost to Parent. One-third of this inventory is still on hand at 30 June 20X7. Transaction 4: On 1 November 20X6, Parent borrowed $50 000 from Sub at an interest rate of 10 per cent per annum. The interest on the loan is payable every six months starting 1 May 20X7. The loan is still outstanding at 30 June 20X7. Which transaction would affect the calculation of the non-controlling interest in the consolidated profit for the financial year ended 30 June 20X7? A. Transaction 1 B. Transaction 2 C. Transaction 3 D. Transaction 4
Parent Ltd (Parent) controls a subsidiary Sub Ltd (Sub), in which it owns 70 per cent of the issued capital since 30 June 20X3. The following transactions are relevant for the preparation of the consolidated financial statements for the financial year ending 30 June 20X7.
Transaction 1: During the financial year ending 30 June 20X4, Sub sold an item of plant to Parent at a loss. Parent is still using the plant at 30 June 20X7.
Transaction 2: Sub paid an interim dividend in August 20X5. Parent is exempt from income tax on dividends received from the subsidiary.
Transaction 3: During the financial year ending 30 June 20X7, Parent sold inventory to Sub for a price greater than its cost to Parent. One-third of this inventory is still on hand at 30 June 20X7.
Transaction 4: On 1 November 20X6, Parent borrowed $50 000 from Sub at an interest rate of 10 per cent per annum. The interest on the loan is payable every six months starting 1 May 20X7. The loan is still outstanding at 30 June 20X7.
Which transaction would affect the calculation of the non-controlling interest in the consolidated profit for the financial year ended 30 June 20X7?
A.
Transaction 1
B.
Transaction 2
C.
Transaction 3
D.
Transaction 4
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