Question

Assume that Chapman Company acquired Abernethy’s common stock for $500,000 in cash. Assume that the equipment and long-term liabilities had fair values of $220,000 and $120,000, respectively, on the acquisition date. Chapman uses the initial value method to account for its investment. Prepare consolidation worksheet entries for December 31, 2011, and December 31, 2012.
Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2011. As of that date, Abernethy has the following trial balance:


During 2011, Abernethy reported income of $80,000 while paying dividends of $10,000. During
2012, Abernethy reported income of $110,000 while paying dividends of$30,000.


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  • CreatedOctober 04, 2014
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