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A Limited has a 25% interest in B Limited and has significant influence over B...

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Accounting

A Limited has a 25% interest in B Limited and has significant influence over B Limited. A Limited sold inventory to B Limited at a profit. At year end B Limited still had inventory on hand amounting to R100 000. A Ltd sells inventory to B Ltd at a profit mark-up of 20% on selling price. Assume a SA normal tax rate of 30%.

Prepare the pro forma consolidation journal entries for the above transaction. [10 marks]

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