Reference no: EM133020975

Question - Bigger Company owns all the issued capital of Smaller Company. The financial statements of Bigger Company and Smaller Company on 30 June 2019 are as follows: Bigger Company Smaller Company $ $ Statement of comprehensive income and reconciliation of retained earnings Profit before tax 500 500 Tax 125 200 Profit after tax 375 300 Opening retained earnings 4000 1500 less Dividends proposed 175 250 Statement of financial position Shareholders' funds Retained earnings 4200 1550 Share capital 1250 2500 Liabilities Accounts payable 2500 500 Dividends payable 175 250 8125 4800 Assets Cash 250 350 Accounts receivable 125 650 Dividends receivable 250 - Inventory 375 800 Plant and equipment 2125 3000 Investment in Smaller Company 5000 - 8125 4800 Bigger Company acquired 100 per cent interest in Smaller Company on 1 July 2016 for a cost of $5,000. The share capital and reserve of Smaller Company on the date of acquisition are: Share capital: $2,500, retained earnings: $1,500. The directors believe that goodwill has been impaired by 20 per cent in the year to 30 June 2019. Provide the consolidation journal entries and consolidation worksheet.