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Problem 3-20 (LO 3-3b) Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2017. As of that date, Abernethy has the following

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Problem 3-20 (LO 3-3b) 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 $ 52,800 Accounts receivable $ 49,500 Additional paid in capital 50,000 Buildings (net) (4-year remaining life) 174,000 Cash and short-term investments 84,000 Common stock 250,000 Equipment (net) (5.year remaining life) 315,000 Inventory 137,500 Land 90,500 Long-term liabilities (mature 12/31/20) 188,500 Retained earnings, 1/1/17 323,600 Supplies 14,400 Totals $864,900 $ 864,900 A During 2017 Abernethy reported net income of $129,000 while declaring and paying dividends of $16,000 During 2018. Abernethy reported net income of $176,000 while declaring and paying dividends of $38.000 Assume that Chapman Company acquired Abernethy's common stock for $731110 in cash. Assume that the equipment and long term liabilities had fair values of $338,650 and $156,340, iespectively, 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.) 1 Prepare entry S to eliminate stockholders' equity accounts of subsidiary. 2 Prepare entry A to recognizemlocations determined above in connection with acquisition-date fair values. 3 Prepare entry I to eliminate intra-entity dividend declarations recorded by parent as income. 4 Prepare entry E to recognize 2017 amortization expense. 5 Prepare entry *C to convert parent company figures to equity method by recognizing subsidiary's increase in book value for prior year ($129,000 net income less $16,000 dividend declaration) and excess amortizations for that period ($12,7701. 6 Prepare entry S to eliminate beginning of year stockholders' equity accounts of subsidiary. The retained earnings balance has been adinasted for 2017 net income and dividends. 7 Prepare entry A to recognize allocations relating to investment--balances shown here are as of the beginning of the current year (original allocation less excess amortizations for the prior period]. 8 Prepare entry I to eliminate intra-entity dividend declarations recorded by parent as income. 9 Prepare entry E to recognize 2018 amortization expense

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