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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: Accounts payable
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Accounts payable Accounts receivable. Additional paid-in capital Buildings (net) (4-year remaining life) Debit Credit $ 50,500 $ 44,100 50,000 166,000 Cash and short-term investments 79,250 Common stock 250,000 Equipment (net) (5-year remaining life) 292,500 Inventory 100,500 Land 128,000 Long-term liabilities (mature 12/31/23) 188,000 Retained earnings, 1/1/201 288,850. Supplies Totals 17,000 $827,350 $ 827,350 During 2020, Abernethy reported net income of $103,000 while declaring and paying dividends of $13,000. During 2021, Abernethy reported net income of $144,250 while declaring and paying dividends of $58,000. Assume that Chapman Company acquired Abernethy's common stock for $694,300 in cash. As of January 1, 2020, Abernethy's land had a fair value of $142,700, its buildings were valued at $210,000, and its equipment was appraised at $264,000. 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 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.) view transaction list Consolidation Worksheet Entries 1 Prepare entry *C to convert parent's beginning retained earnings to full accrual basis. Note: Enter debits before credits. 12 Date Accounts Debit Credit December 31, 2020 No journal entry required 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.) view transaction list Consolidation Worksheet Entries < 6 8 12 Prepare entry S to eliminate stockholders' equity accounts of subsidiary. Note: Enter debits before credits. Date Accounts Debit Credit 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.) view transaction list Consolidation Worksheet Entries < 3 Prepare entry A to recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill. Note: Enter debits before credits Date Accounts Debit Credit 12 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.) view transaction list Consolidation Worksheet Entries < 4 8 12 ***** Prepare entry I to eliminate the income accrual for 2020 less the amortization recorded by the parent using the equity method. Note: Enter debits before credits. Accounts Debit Credit 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.) view transaction list Consolidation Worksheet Entries Prepare entry D to eliminate intra-entity dividend transfers. 8 12 Note: Enter debits before credits. Accounts Debit Credit 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.) view transaction list Consolidation Worksheet Entries < 6 Prepare entry E to recognize current year amortization expense. 8 12 Note: Enter debits before credits. Date Accounts Debit Credit 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.) view transaction list Consolidation Worksheet Entries < 5 6 7 8 12 Prepare entry "C to convert parent's beginning retained earnings to full accrual basis. Note: Enter debits before credits. Datel Accounts Debit Credit equity method for this investmen 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.) view transaction list Consolidation Worksheet Entries < 8 Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021. Note: Enter debits before credits. Accounts Debit Credit 12 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.) view transaction list Consolidation Worksheet Entries 6 8 9 Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021. Note: Enter debits before credits. 12 Debit Credit 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.) view transaction list Consolidation Worksheet Entries 8 10 ***** 12 Prepare entry I to eliminate the income accrual for 2021 less the amortization. recorded by the parent using the equity method. Note: Enter debits before credits, 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.) view transaction list Consolidation Worksheet Entries Prepare entry D to eliminate intra-entity dividend transfers. 10 11 12 Note: Enter debits before credits. Accounts Debit Credit 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.) view transaction list Consolidation Worksheet Entries < 22 10 11 12 Prepare entry E to recognize current year amortization expense. Note: Enter debits before credits. Accounts Debit Credit
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