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ounts payable ounts receivable D $4

ounts payable ounts receivable D $4

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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PLease explain the calculate for buildings and equipment

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Problem 3-19 (Algo) (LO 3-3a) 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 $ 40,400 128,000 68,750 407,500 119,000 82,000 15,600 $861,250 Credit $ 50,900 50,000 250,000 171,500 338,850 $861,250 During 2020, Abernethy reported net income of $124,000 while declaring and paying dividends of $16,000. During 2021, Abernethy reported net income of $164,750 while declaring and paying dividends of $60,000. Assume that Chapman Company acquired Abernethy's common stock for $756,500 in cash. As of January 1, 2020, Abernethy's land had a fair value of $93,100, its buildings were valued at $194,800, and its equipment was appraised at $366,250. Chapman uses the equity method for this 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.)
Transcribed Image Text:Problem 3-19 (Algo) (LO 3-3a) 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 $ 40,400 128,000 68,750 407,500 119,000 82,000 15,600 $861,250 Credit $ 50,900 50,000 250,000 171,500 338,850 $861,250 During 2020, Abernethy reported net income of $124,000 while declaring and paying dividends of $16,000. During 2021, Abernethy reported net income of $164,750 while declaring and paying dividends of $60,000. Assume that Chapman Company acquired Abernethy's common stock for $756,500 in cash. As of January 1, 2020, Abernethy's land had a fair value of $93,100, its buildings were valued at $194,800, and its equipment was appraised at $366,250. Chapman uses the equity method for this 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.)
Date 2021-12-31 Account Land Buildings Goodwill Equipment Investment in Abernethy Dr $11,100 $50,100 $81,000 Cr $33,000 $109,200 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
Transcribed Image Text:Date 2021-12-31 Account Land Buildings Goodwill Equipment Investment in Abernethy Dr $11,100 $50,100 $81,000 Cr $33,000 $109,200 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
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