TRANSACTION LIST:

-1Prepare entry *C to convert parent's beginning retained earnings to full accrual basis. -2Prepare entry S to eliminate stockholders' equity accounts of subsidiary. -3Prepare entry A to recognize allocations attributed to fair value of specific accounts at acquisition date with residual fair value recognized as goodwill. -4Prepare entry I to eliminate the income accrual for 2020 less the amortization recorded by the parent using the equity method. -5Prepare entry D to eliminate intra-entity dividend transfers. -6Prepare entry E to recognize current year amortization expense. -7Prepare entry *C to convert parent's beginning retained earnings to full accrual basis. -8Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021. -9Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021. -10Prepare entry I to eliminate the income accrual for 2021 less the amortization recorded by the parent using the equity method. -11Prepare entry D to eliminate intra-entity dividend transfers. -12Prepare entry E to recognize current year amortization expense.

JOURNAL ENTRY OPTIONS:

No journal entry required Accounts payable Accounts receivable Additional paid-in capital Buildings Cash and short-term investments Common stockAbernethy Common stockChapman Depreciation expense Dividends declared Equipment Equity in subsidiary earnings Goodwill Inventory Investment in Abernethy Investment in Chapman Land Long-term liabilities Retained earnings1/1/20 Retained earnings1/1/21 Supplies

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 $ 50,800 $ 48,280 50,000 161,000 81,750 250,000 Accounts payable Accounts receivable Additional paid in capital Buildings (net) (4-year remaining life) Cash and short-term investments Common stock Equipment (net) (5-year remaining life) Inventory Land Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies Totals 242,500 135,500 129,500 167,000 297,350 16,700 $815, 150 $ 815,150 During 2020, Abernethy reported net income of $90,000 while declaring and paying dividends of $11,000. During 2021, Abernethy reported net Income of $134,750 while declaring and paying dividends of $34,000. Assume that Chapman Company acquired Abernethy's common stock for $694,850 In cash. As of January 1, 2020, Abernethy's land had a fair value of $140,700, its buildings were valued at $ 201,800, and its equipment was appraised at $217,250. Chapman uses the equity method for this Investment. Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.)