Assume that Chapman Company acquired Abernethy’s common stock for $490,000 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $90,000, its buildings were valued at $160,000, and its equipment was appraised at $180,000. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021.

Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2020. As of that date, Abernethy has the following trial balance:

During 2020, Abernethy reported net income of $80,000 while declaring and paying dividends of $10,000. During 2021, Abernethy reported net income of $110,000 while declaring and paying dividends of $30,000.

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Debit Credit Accounts payable. $ 50,000 Accounts receivable. $ 40,000 Additional paid-in capital... Buildings (net) (4-year remaining life) 50,000 120,000 Cash and short-term investments 60,000 Common stock . 250,000 Equipment (net) (5-year remaining life) . Inventory.. 200,000 90,000 Land..... 80,000 Long-term liabilities (mature 12/31/23). Retained earnings, 1/1/20. Supplies 150,000 100,000 10,000 $600,000 Totals. $600,000