Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2017. As of that date, Abernethy has the following trial balance: Debit Credit
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2017. As of that date, Abernethy has the following trial balance: Debit Credit Accounts payable $ 50,500 44,100 Accounts receivable Additional paid-in capital Buildings (net) (4-year remaining life) 50,000 166,000 79,250 Cash and short-term investments Common stock 250,000 Equipment (net) (5-year remaining life) Inventory 292,500 100,500 Land 128,000 Long-term liabilities (mature 12/31/20) Retained earnings, 1/1/17 Supplies 188,000 288,850 17,000 $827,350 $827,350 Totals During 2017, Abernethy reported net income of $103,000 while declaring and paying dividends of $13,000. During 2018, 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 $692,830 in cash. Assume that the equipment and long- term liabilities had fair values of $313,100 and $156,920, respectively, on the acquisition date. Chapman uses the initial value method to account for its investment. Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started