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Greenstreet Ltd owns 100% of the issued ordinary share capital of Bogart Ltd. During the year...

Greenstreet Ltd owns 100% of the issued ordinary share capital of Bogart Ltd. During the year ended 31 March 20X1, Greenstreet Ltd provides cleaning services to Bogart Ltd for $4,000,000. The cost at fair value of these services was $1,000,000. Which consolidation elimination entry is required for this transaction for the year ended 31 March 20X1? Select one: No elimination entry is required because there is no inventory on hand. . Accounts Debit $ Credit $ Retained profits 4,000,000 Cleaning services expense 4,000,000 . Accounts Debit $ Credit $ Cleaning services revenue 4,000,000 Cleaning services expense 4,000,000 . Accounts Debit $ Credit $ Cleaning services revenue 3,000,000 Cleaning services expense 3,000,000

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Answer #1
Debit $ Credit $
Cleaning services revenue 4,000,000
Cleaning services expense 4,000,000

the related revenues, cost of goods sold, and profits etc are all eliminated when the transaction is between holding and subsidiary at the time of consolidation. The reason for these eliminations is that the company cannot recognize revenue from sales to itself; all sales must be to external entities. Since holding company and subsidiaries are assumed to be a sole company.

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