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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: Debit Credit

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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: Debit Credit 58,900 $ 41,500 50,000 211,000 70, 750 250,000 Accounts payable Accounts receivable Additional paid-in capital Buildings (net) (4-year remaining life) Cash and short-term investments Common stock Equipment (net) (5-year remaining life) Inventory Land Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies Totals 430,000 139,000 121,500 174,000 498,450 17,600 $1,031,350 $1,031,350 During 2020, Abernethy reported net income of $120,000 while declaring and paying dividends of $15,000. During 2021, Abernethy reported net income of $170,000 while declaring and paying dividends of $48,000. Assume that Chapman Company acquired Abernethy's common stock for $907,300 in cash. Assume that the equipment and long- term liabilities had fair values of $451,050 and $143,400, 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1 Prepare entry S to eliminate stockholders' equity accounts of subsidiary. 2 Prepare entry A to recognize allocations in connection with acquisition-date fair values. 3 Prepare entry I to eliminate intra-entity dividends. 4 Prepare entry E to recognize 2020 amortization expense. 5 Prepare entry *C to convert parent company figures to equity method. 6 Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021. 7 Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021. 8 Prepare entry I to eliminate intra-entity dividends. 9 Prepare entry E to recognize 2021 amortization expense

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