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On 1 June 2 0 1 0 , Big Farm Limited acquired a hundred percent of the share capital of Small Farm Limited for $
On June Big Farm Limited acquired a hundred percent of the share capital of Small Farm Limited for $ On the day of acquisition all the assets of Small Farm Limited are considered to be fairly valued and the shareholder equity of the company was as follows:
Contributed Capital $
Retained Earnings $
Revaluation reserve $
During the financial year ended December Big Farm Limited made sales to Small Farm Limited amounting to $ Big Farm Limited had always sold goods to Small Farm Limited at a markup of on cost During the financial year ended December Small Farm Limited sold goods to Big Farm Limited amounting to $ Small Farm Limited had always sold good to Big Farm Limited at a markup of on cost
The inventory of Big Farm Limited as at January consists of items amounting to $ that was purchased from Small Farm Limited. Of the inventory Big Farm Limited has on hand at December $ was purchased from Small Farm Limited.
The inventory of Small Farm Limited as at December consists of items amounting to $ that was purchased from Big Farm Limited. This was the first year that Small Farm Limited had purchased inventory from Big Farm Limited.
For the year ended December Small Farm Limited paid management fees of $ to Big Farm Limited.
For the year ended December Small Farm Limited paid interim dividends of $ and declared a final dividend of $
There have been no intragroup transfer of noncurrent assets and no transfers to or from revaluation reserve took place during the year.
The directors of Big Farm Limited were of the opinion that an amount of $ of goodwill arising from the acquisition has been impaired during the year ending December For the previous financial years the impairment of goodwill was $
Big Farm Limited remained the sole owner of Small Farm Limited as at December
Assume income tax rate of
REQUIRED:
Prepare notional journal entries with narrations to consolidate the financial statements of Big Farm Limited and its wholly owned subsidiary Small Farm Limited for the year ended December
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