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Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. 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 12/31/23) Retained earnings, 1/1/201 Supplies. Totals Debit $ 41,000 184,000 77,250 400,000 117,500 107,500 16,900 $944,150 Credit $ 53,700 50,000 250,000 173,000 417,450 $944,150 During 2020, Abernethy reported net income of $98,000 while declaring and paying dividends of $12,000. During 2021, Abernethy reported net income of $128,250 while declaring and paying dividends of $39,000.

Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. 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 12/31/23) Retained earnings, 1/1/201 Supplies. Totals Debit $ 41,000 184,000 77,250 400,000 117,500 107,500 16,900 $944,150 Credit $ 53,700 50,000 250,000 173,000 417,450 $944,150 During 2020, Abernethy reported net income of $98,000 while declaring and paying dividends of $12,000. During 2021, Abernethy reported net income of $128,250 while declaring and paying dividends of $39,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. 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 12/31/23) Retained earnings, 1/1/20 Supplies Totals Debit $ 41,000 184,000 77,250 400,000 117,500 107,500 16,900 $944, 150 Credit $ 53,700 50,000 250,000 173,000 417,450 $944,150 During 2020, Abernethy reported net income of $98,000 while declaring and paying dividends of $12,000. During 2021, Abernethy reported net income of $128,250 while declaring and paying dividends of $39,000. Assume that Chapman Company acquired Abernethy's common stock for $825,690 in cash. Assume that the equipment and long- term liabilities had fair values of $422.400 and $139,760, 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 ransaction/event, select "No journal entry required" in the first account field.)
Transcribed Image Text:Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. 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 12/31/23) Retained earnings, 1/1/20 Supplies Totals Debit $ 41,000 184,000 77,250 400,000 117,500 107,500 16,900 $944, 150 Credit $ 53,700 50,000 250,000 173,000 417,450 $944,150 During 2020, Abernethy reported net income of $98,000 while declaring and paying dividends of $12,000. During 2021, Abernethy reported net income of $128,250 while declaring and paying dividends of $39,000. Assume that Chapman Company acquired Abernethy's common stock for $825,690 in cash. Assume that the equipment and long- term liabilities had fair values of $422.400 and $139,760, 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 ransaction/event, select "No journal entry required" in the first account field.)
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