Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that...

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Accounting

Chapman Company obtains 100 percent of Abernethy Company’s stockon January 1, 2017. As of that date, Abernethy has the followingtrial balance: Debit Credit Accounts payable $ 50,000 Accountsreceivable $ 40,000 Additional paid-in capital 50,000 Buildings(net) (4-year remaining life) 120,000 Cash and short-terminvestments 60,000 Common stock 250,000 Equipment (net) (5-yearremaining life) 200,000 Inventory 90,000 Land 80,000 Long-termliabilities (mature 12/31/20) 150,000 Retained earnings, 1/1/17100,000 Supplies 10,000 Totals $ 600,000 $ 600,000 During 2017,Abernethy reported net income of $80,000 while declaring and payingdividends of $10,000. During 2018, Abernethy reported net income of$110,000 while declaring and paying dividends of $30,000. Assumethat Chapman Company acquired Abernethy’s common stock by paying$520,000 in cash. All of Abernethy’s accounts are estimated to havea fair value approximately equal to present book values. Chapmanuses the partial equity method to account for its investment.Prepare the consolidation worksheet entries for December 31, 2017,and December 31, 2018.

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Please hit LIKE button if this helped For any further explanation please put your query in comment will get back to you Fair value allocation and annual excess amortizations Abernethy fair value consideration paid 520000 Book value 400000 Excess fair value over book value all goodwill 120000 Account Debit Credit See Answer

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