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

	Debit			Credit
Accounts payable				$	56,700
Accounts receivable	$	43,800
Additional paid-in capital					50,000
Buildings (net) (4-year remaining life)		143,000
Cash and short-term investments		80,250
Common stock					250,000
Equipment (net) (5-year remaining life)		295,000
Inventory		110,500
Land		112,000
Long-term liabilities (mature 12/31/23)					171,000
Retained earnings, 1/1/20					268,750
Supplies		11,900
Totals	$	796,450		$	796,450

During 2020, Abernethy reported net income of $122,500 while declaring and paying dividends of $15,000. During 2021, Abernethy reported net income of $159,250 while declaring and paying dividends of $49,000.

Assume that Chapman Company acquired Abernethy’s common stock for $698,050 in cash. As of January 1, 2020, Abernethy’s land had a fair value of $123,900, its buildings were valued at $219,400, and its equipment was appraised at $254,500. Chapman uses the equity method for this investment.

Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021.

Answer rating: 100% (QA)

Required solution Calculation of goodwill at the time of acquisition Purchase Price 675790 Less Book Value Common stock 250000 Additional paid in capi... View the full answer