Bigger Company owns all of the issued capital of Smaller Company. The financial statements of Bigger Company and Smaller Company at 30 June 2023 are as follows:

 

 

Bigger Company acquired its 100 per cent interest in Smaller Company on 1 July 2022 for a cost of $5000. The share capital and reserves of Smaller Company on the date of acquisition are:

    

Provide the consolidated statement of profit or loss and other comprehensive income and statement of financial position for Bigger Company and its controlled entity for the year ending 30 June 2023.
 

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Reconciliation of opening and closing retained earnings Profit before tax Tax Profit after tax Opening retained earnings less Dividends proposed Closing retained earnings Bigger Company ($) 500 (125) 375 4 000 4 375 (175) 4 200 Smaller Company 500 (200) 300 1500 1 800 (250) 1 550 Reconciliation of opening and closing retained earnings Profit before tax Tax Profit after tax Opening retained earnings less Dividends proposed Closing retained earnings Bigger Company ($) 500 (125) 375 4 000 4 375 (175) 4 200 Smaller Company 500 (200) 300 1500 1 800 (250) 1 550

Answer rating: 100% (QA)

Opening Retained Earnings Bigger Company 4200 Smaller Company 1550 Intercompany dividends eliminated 250 Consolidated Opening Retained Earnings 4200 1... View the full answer