$3)$ Chapman Company obtains $100$ percent of Abernethy Company$$s stock on January $1,2020.$

As of that date, Abernethy has the following trial balance:

Debit Credit

Accounts

payable...................................... $ $50,000$

Accounts receivable.................................... $ $40,000$

Additional paid$-$in

capital................................ $50,000$

Buildings $($net$)(4-$year remaining life$).....................120,000$

Cash and short$-$term investments $........................60,000$

Common stock

$........................................250,000$

Equipment $($net$)(5-$year remaining life$)....................200,000$

Inventory............................................. $90,000$

Land................................................. $80,000$

Long$-$term liabilities $($mature

$12/31/23)...................150,000$

Retained earnings,

$1/1/20..............................100,000$

Supplies $.............................................10,000$

Totals.............................................. $$600,000$ $$600,000$

During $2020,$ Abernethy reported net income of $$80,000$ while declaring and paying dividends of

$$10,000.$ During $2021,$ Abernethy reported net income of $$110,000$ while declaring and paying

dividends of $$30,000.$

a$)$ Assume that Chapman Company acquired Abernethy$$s common stock for $$490,000$ in

cash. As of January $1,2020,$ Abernethy$$s land had a fair value of $$90,000,$ its buildings

were valued at $$160,000,$ and its equipment was appraised at $$180,000.$ Chapman uses the

equity method for this investment. Prepare consolidation worksheet entries for December

$31,2020,$ and December $31,2021.$

b$)$ Assume that Chapman Company acquired Abernethy$$s common stock for $$500,000$ in

cash. Assume that the equipment and long$-$term liabilities had fair values of $$220,000$ and

$$120,000,$ respectively, on the acquisition date. Chapman uses the initial value method to

account for its investment. Prepare consolidation worksheet entries for December $31,2020,$

and December $31,2021.$

c$)$ Assume that Chapman Company acquired Abernethy$$s common stock by paying

$$520,000$ in cash. All of Abernethy$$s accounts are estimated to have a fair value

approximately equal to present book values. Chapman uses the partial equity method to

account for its investment. Prepare the consolidation worksheet entries for December $31,$

$2020,$ and December $31,2021.$