Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy h 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 $ 40,200 170,000 66,750 372,500 109,500 116,000 17,200 $892,150 Credit $ 58,000 50,000 250,000 165,000 369, 150 $ 892,150 During 2020, Abernethy reported net income of $106,500 while declaring and paying dividends of $13,000. During 202 Abernethy reported net income of $142,750 while declaring and paying dividends of $51,000. Assume that Chapman Company acquired Abernethy's common stock for $759,900 in cash. As of January 1, 2020, Abernethy's land had a fair value of $126,400, its buildings were valued at $211,600, and its equipment was appraised at $344,500. Chapman uses the equity method for this investment.
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy h 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 $ 40,200 170,000 66,750 372,500 109,500 116,000 17,200 $892,150 Credit $ 58,000 50,000 250,000 165,000 369, 150 $ 892,150 During 2020, Abernethy reported net income of $106,500 while declaring and paying dividends of $13,000. During 202 Abernethy reported net income of $142,750 while declaring and paying dividends of $51,000. Assume that Chapman Company acquired Abernethy's common stock for $759,900 in cash. As of January 1, 2020, Abernethy's land had a fair value of $126,400, its buildings were valued at $211,600, and its equipment was appraised at $344,500. Chapman uses the equity method for this investment.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Prepare consolidation worksheet entries for December 31, 2021
-Prepare entry S to eliminate
Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021.
Prepare entry I to eliminate the income accrual for 2021 less the amortization recorded by the parent using the equity method.
Prepare entry D to eliminate intra-entity dividend transfers.
Prepare entry E to recognize current year amortization expense.
Transcribed Image Text:Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy ha
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
$ 40,200
170,000
66,750
372,500
109,500
116,000
17,200
$892,150
Credit
$ 58,000
50,000
250,000
165,000
369,150
$ 892,150
During 2020, Abernethy reported net income of $106,500 while declaring and paying dividends of $13,000. During 2021,
Abernethy reported net income of $142,750 while declaring and paying dividends of $51,000.
Assume that Chapman Company acquired Abernethy's common stock for $759,900 in cash. As of January 1, 2020,
Abernethy's land had a fair value of $126,400, its buildings were valued at $211,600, and its equipment was appraised at
$344,500. Chapman uses the equity method for this investment.
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