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Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2014. As of that...

Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2014. As of that date, Abernethy has the following trial balance:

  

Debit Credit
  Accounts payable $ 59,500   
  Accounts receivable $ 46,600
  Additional paid-in capital 50,000   
  Buildings (net) (4-year life) 145,000
  Cash and short-term investments 84,250
  Common stock 250,000   
  Equipment (net) (5-year life) 257,500
  Inventory 106,000
  Land 129,000
  Long-term liabilities (mature 12/31/17) 151,000   
  Retained earnings, 1/1/14 273,050   
  Supplies 15,200
  
     Totals $ 783,550 $ 783,550   
  

  

     During 2014, Abernethy reported net income of $98,500 while declaring and paying dividends of $12,000. During 2015, Abernethy reported net income of $132,250 while declaring and paying dividends of $48,000.

Assume that Chapman Company acquired Abernethy’s common stock for $675,380 in cash. Assume that the equipment and long-term liabilities had fair values of $278,850 and $120,920, respectively, on the acquisition date. Chapman uses the initial value method to account for its investment.

Prepare consolidation worksheet entries for December 31, 2014, and December 31, 2015. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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ekkarill92 answered 3 years ago
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