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

Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. As of that date, Abernethy has the following trial balance:

Debit Credit
Accounts payable $ 50,300
Accounts receivable $ 47,500
Additional paid-in capital 50,000
Buildings (net) (4-year remaining life) 201,000
Cash and short-term investments 61,750
Common stock 250,000
Equipment (net) (5-year remaining life) 447,500
Inventory 127,500
Land 124,000
Long-term liabilities (mature 12/31/20) 162,000
Retained earnings, 1/1/17 514,850
Supplies 17,900
Totals $ 1,027,150 $ 1,027,150

During 2017, Abernethy reported net income of $97,000 while declaring and paying dividends of $12,000. During 2018, Abernethy reported net income of $141,250 while declaring and paying dividends of $48,000.

Assume that Chapman Company acquired Abernethy’s common stock for $919,830 in cash. Assume that the equipment and long-term liabilities had fair values of $471,000 and $131,120, respectively, on the acquisition date. Chapman uses the initial value method to account for its investment.

Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

6-Prepare entry S to eliminate beginning of year stockholders' equity accounts of subsidiary. The retained earnings balance has been adjusted for 2017 net income and dividends.

7-Prepare entry A to recognize allocations relating to investment—balances shown here are as of the beginning of the current year [original allocation less excess amortizations for the prior period]

8-Prepare entry I to eliminate intra-entity dividend declarations recorded by parent as income

9-Prepare entry E to recognize 2018 amortization expense

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Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2017. 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 remaining life) 145,000 Cash and short-term investments 84,250 Common stock 250,000 Equipment (net) (5-year remaining life) 257,500 Inventory 106,000 Land 129,000 Long-term liabilities (mature 12/31/20) 151,000 Retained earnings, 1/1/17 273,050 Supplies 15,200 Totals $ 783,550 $ 783,550 During 2017, Abernethy...
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