TIUUIC JID ILU JO) Chapman Company obtains 100 percent of Abemethy Company's stock on January 1, 2017 As of that date, Abernethy has the following trial balance Debit 54.100 5 48.500 50.000 130,000 66 000 250,000 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 12/31/20) Retained earnings, 1/1/17 Supplies Totals 437,500 109,000 89.000 178,500 358,800 11.400 $ 891 400 $ 891.400 During 2017. Abernethy reported net income of $126,000 while declaring and paying dividends of $16,000. During 2018. Abernethy reported net income of S174,000 while declaring and paying dividends of $49,000 Assume that Chapman Company acquired Abemethy's common stock for $773,550 in cash As of January 1, 2017 Abernethy's land had a fair value of $104.200. its buildings were valued at $208.800 and its equipment was appraised at $396,500. 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.) view transaction list 1 Prepare entry S to eliminate stockholders' equity accounts of subsidiary. 2. Prepare entry A to recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill. 3 Prepare entry I to eliminate $126,000 income accrual for 2017 less $11,500 amortization recorded by parent using equity method. 4 Prepare entry D to eliminate intra-entity dividend transfers. 5 Prepare entry E to recognize current year amortization expense. Note : = journal entry has been entered 6 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. 7 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). 8 Prepare entry I to eliminate $174,000 income accrual less $11,500 amortization recorded by parent during 2018 using equity method. 9 Prepare entry D to eliminate intra-entity dividend trancfore Note : = journal entry has been entered 9 Prepare entry D to eliminate intra-entity dividend transfers. 10 Prepare entry E to recognize current year amortization expense. Note : = journal entry has been entered Prev 1 of 2