Secure htp 6 Help Chapman Company obtains 100 percent of Abermnethy Company\'s s

Question

Secure htp 6 Help Chapman Company obtains 100 percent of Abermnethy Company's stock on Jenuary 1.2017 As of that date, Abermethy has the following trial balance Accounts payable Accounts receivable Additional paid-in capital Buildings (net) (4-year remaining life) s 5e.58e $44,160 5,800 166,009 9,250 Common stock 258,e00 reuipeent (net) (-yer resainine ife) Long-tere llabllities (eature 12/31/20) Retained earnings, 1/1/11 188,009 288,850 Supplies Totals 827.358 827,350 During 2017, Abernethy reported net income of $ 103,000 while declaring and paying dividends of $13,000 During 2018, Abernethy reported net income of $144,250 hile declaring and paying dividencds of $58,000 Assume that Chepman Company acquired Abernethy's common stock for $692,830 in cash Assume that the equipment and long- term lioblaties had fair values of $313,100 and $156920, respectively. on the acquisition date Chapman uses the initial value method to account for its investment Prepare consolidation worksheet entries for transaction/event, select "No journal entry required" in the first account field.) December 31, 2017, and December 31, 2018 (If no entry is required for a

Explanation / Answer

Note 1). Acquisition date allocation and annual excess fair value amortisations:

Date Particulars Debit Credit 2017 Entry S Common stock - Abernethy $250,000 Additional paid-in-capital $50,000 Retained Earnings, 1/1/17 $288,850 Investment in Abernethy $588,850 Entry A Land $128,000 Building $166,000 Goodwill $52,300 Equipment $20600 Investment in Abernethy (Balancing Figure) $325,700 Entry I Equity in subsidiary earnings Investment in Abernethy Entry D Investment in Abernethy $13,000 Dividend paid $13,000 Entry E Depreciation Expense $4120 Equipment $4120 Dec 31, 2018 Entry S Common Stock - Abernethy $250,000 Additional paid-in-capital $50,000 Retained Earnings - 1/1/18 $378,850 Investment in Abernethy $678,850 Entry A Land $128,000 Building $166,000 Goodwill $52300 Equipment $16,480 Investment in Abernethy $329,820 Entry I Equity in subsidiary earnings Investment in Abernethy Entry D Investment in Abernethy $58,000 Dividend paid $58,000 Entry E Depreciation Expense $4120 Equipment $4120

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