An entity issues shares as consideration for the purchase of inventory. The shares were issued on 1^st January, 2017. The inventory is eventually sold on 31^st December, 2018. The value of the inventory on 1^st January, 2017, was Rs. 8,00,000. This value was unchanged upto the date of sale. The sale proceed was Rs. 12,00,000. The shares issued have a market value of Rs. 9,00,000. Which of the following statement correctly describes the accounting treatment of this share based payment transaction?

A. Equity is increased by Rs. 8,00,000 and inventory is increased by Rs. 8,00,000. The inventory value is expensed on sale on 31^st December, 2018

B. Equity is increased by Rs. 9,00,000, inventory is increased by Rs. 9,00,000, the inventory value is expensed on sale on 31^st December, 2018

C. Equity is increased by Rs. 8,00,000 and inventory is increased by Rs. 8,00,000, the inventory value is expensed over the two years to 31^st December, 2018

D. Equity is increased by Rs. 9,00,000, inventory is increased by Rs. 9,00,000, the inventory value is expensed over the two years to 31^st December, 2018

Answer: Option A