Chapman Company obtains 100 percent of the shares of Abernethy Company on January 1, 2014. As of
Question:
Chapman Company obtains 100 percent of the shares of Abernethy Company on January 1, 2014. As of that date, Abernethy has the following trial balance: |
Debit | Credit | |
Accounts payable | $51,900 | |
accounts receivable | $43,100 | |
Additional payment in principal | 50,000 | |
Buildings (net) (4 years of life) | 175.000 | |
Cash and short-term investments | 75,500 | |
Common actions | 250.000 | |
Equipment (net) (5 years of life) | 439,500 | |
Inventory | 127,000 | |
Tierra | 116,500 | |
Long-term liabilities (maturity 12/31/17) | 170.500 | |
Retained earnings, 1/1/14 | 464,900 | |
supplies | 10,700 | |
Totals | $ 987,300 | $ 987,300 |
During 2014, Abernethy reported net income of $87,000 while declaring and paying dividends of $11,000. |
Suppose the Chapman Company purchased Abernethy's common stock for $873,250 in cash. As of January 1, 2014, Abernethy's land had a fair value of $129,800, its buildings were valued at $243,800, and its equipment was valued at $403,750. Chapman uses the equity method for this investment. |
Required
Prepare the consolidation adjustments for January 1, 2014.
Prepare the consolidation adjustments for December 31, 2014.
Prepare the consolidation adjustments for December 31, 2015.
Advanced Accounting
ISBN: 978-1259444951
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni