December 31, 2020 and December 31, 2021.  Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:

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 the Chapman Company acquired Abernethy’s common stock for $819,850 in cash.  As of January 1, 2020, Abernethy’s land had a fair value of $141,900 its buildings were valued at $251,800, and its equipment was appraised at $306,750.  Chapman uses the equity method for this investment. 

Prepare consolidation worksheet entries for December 31, 2020 and December 31, 2021. 

Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021.

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