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Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: During 2020,
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: During 2020, Abernethy reported net income of $106,500 while declaring and paying dividends of $13,000. During 2021, Abernethy reported net income of $142,750 while declaring and paying dividends of $51,000. Assume that Chapman Company acquired Abernethy's common stock for $759,900 in cash. As of January 1,2020, Abernethy's land had a fair value of $126,400, its buildings were valued at $211,600, and its equipment was appraised at $344,500. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Prepare entry 5 to eliminate stockholders' equity accounts of subsidiary. 3 Prepare entry A to recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill. 4 Prepare entry I to eliminate the income accrual for 2020 less the amortization recorded by the parent using the equity method. 5 Prepare entry D to eliminate intra-entity dividend transfers. 6 Prepare entry E to recognize current year amortization 7 Prepare entry C to convert parent's beginning retained earnings to full accrual basis. 8 Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021 . 9 Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021. 10 Prepare entry I to eliminate the incoftirg accrual for 2021 less the amortization recorded by the parent using the equity method. 11 Prepare entry D to eliminate intra-entity dividend transfers. 12 Prepare entry E to recognize current year amortization expense
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