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0:25 Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance Debit Credit $ 50,000 Accounts payable Accounts receivable $ 48,200 Additional paid-in capital 50,000 161,000 Buildings (net) (4-year remaining life) Cash and short-term investments Common stock 81,750 250,000 Equipment (net) (5-year remaining life) 242,500 Inventory 135,500 Land 129,500 Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 167,000 297,350 Supplies 16,700 Totals $815,150 $ 815,150 During 2020, Abernethy reported net income of $90,000 while declaring and paying dividends of $11,000, During 2021, Abernethy reported net income of $134,750 while declaring and paying dividends of $34,000. Assume that Chapman Company acquired Abernethy's common stock for $699,660 in cash. Assume that the equipment and long- term liabilities had fair values of $264,550 and $136,840, 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 transaction/event, select "No journal entry required" in the first account field.) view transaction list view transaction list Prepare entry S to eliminate stockholders' equity accounts of subsidiary. 2 Prepare entry A to recognize allocations in connection with acquisition-date fair values. 3 Prepare entry I to eliminate intra-entity dividends. Prepare entry E to recognize 2020 amortization expense. 5 Prepare entry "C to convert parent company figures to equity method. Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021. journal entry has been entered Note: EX: BREA 4 Prepare entry E to recognize 2020 amortization expense. 5 Prepare entry *C to convert parent company figures to equity method. 6 Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021. 7 Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021. 8 Prepare entry I to eliminate intra-entity dividends. 9 Prepare entry E to recognize 2021 amortization expense. Note: = journal entry has been entered TARKE EX: EX view transaction list No 1 N N M N 2 3 6 7 8 Date: December 31, 2020 December 31, 2020 December 31, 2020 December 31, 2021 December 31, 2021 December 31, 2021 transaction list Common stock-Abernethy Additional paid-in capital Retained earnings-1/1/20 Investment in Abernethy Goodwill Investment in Abernethy Equity in subsidiary earnings Investment in Abernethy Common stock-Abernethy Additional paid-in capital Retained earnings-1/1/20 Investment in Abernethy Goodwill Investment in Abernethy Equity in subsidiary earnings Investment in Chapman Accounts Debit 250,000 50,000 297,350 140,700 90,000 250,000 50,000 372,350 140,700 134,750 Credit 597,350 140,700 90,000 672,350 140,700 134,750 ********

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