Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. 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, 2020. As of that date, Abernethy has the following trial balance: Debit Credit $ 55,300 $ 45,800 50,000 197,000 81,500 250,000 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 12/31/23) Retained earnings, 1/1/20 Supplies Totals 345,000 124,500 125,000 176,500 402,900 15,900 $934,700 $ 934,700 During 2020, Abernethy reported net income of $124,500 while declaring and paying dividends of $16,000. During 2021, Abernethy reported net income of $167,750 while declaring and paying dividends of $41,000. Assume that Chapman Company acquired Abernethy's common stock for $813,060 in cash. Assume that the equipment and long-term liabilities had fair values of $368,400 and $143,940, 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.) Consolidation Worksheet Entries Prepare entry I to eliminate intra-entity dividends. Note: Enter debits before credits. Accounts Debit Credit Date December 31, 2020 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare entry E to recognize 2020 amortization expense. Note: Enter debits before credits. Accounts Debit Credit Date December 31, 2020 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries 1 2 3 3 4 5 6 7 8 9 9 > Prepare entry *C to convert parent company figures to equity method. Note: Enter debits before credits. Accounts Debit Credit Date December 31, 2021 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021. Note: Enter debits before credits. Accounts Debit Credit Date December 31, 2021 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries 1 2 3 4 5 6 7 8 9 Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021. Note: Enter debits before credits. Accounts Debit Credit Date December 31, 2021 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare entry A to recognize allocations in connection with acquisition-date fair values. Note: Enter debits before credits. Accounts Debit Credit Date December 31, 2021 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries
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