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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 $105,000 while declaring and paying dividends of $13,000. During 2021 , Abernethy reported net income of $136,750 while declaring and paying dividends of $36,000. Assume that Chapman Company acquired Abernethy's common stock for $612,390 in cash. Assume that the equipment and long-term liabilities had fair values of $232,000 and $130,860, 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. 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
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