* Prepare entry A to recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill.

* Prepare entry I to eliminate $120,000 income accrual for 2017 less $9,200 amortization recorded by parent using equity method.

* Prepare entry D to eliminate intra-entity dividend transfers.

* Prepare entry E to recognize current year amortization expense.

* Prepare entry S to eliminate beginning stockholders' equity of subsidiary—the Retained Earnings account has been adjusted for 2017 income and dividends. Entry *C is not needed because equity method was applied.

* Prepare entry A to recognize allocations relating to investment—balances shown here are as of beginning of current year [original allocation less excess amortizations for the prior period].

* Prepare entry I to eliminate $170,000 income accrual less $9,200 amortization recorded by parent during 2018 using equity method.

* Prepare entry D to eliminate intra-entity dividend transfers.

* Prepare entry E to recognize current year amortization expense.
 

Chapman Company obtains 100 percent of Abernethy Company s stock on January 1, 2017. As of that date, Abernethy has the following trial balance: 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 12/31/20) Retained earnings, 1/1/17 Supplies Totals $ Debit 41,500 211,000 70,750 430,000 139,000 121,500 17,600 $1,031,350 Credit $ 58,900 50,000 250,000 174,000 498,450 $1,031,350 During 2017, Abernethy reported net income of $120,000 while declaring and paying dividends of $15,000. During 2018, 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 $902,200 in cash. As of January 1, 2017, Abernethy s land had a fair value of $133,000, its buildings were valued at $277,000, and its equipment was appraised at $393,500. Chapman uses the equity method for this 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.)