Question

please do whay is requested in the second picture based on the info provided in the first

Problems 19 through 21 should be viewed as independent situations. They are based on the Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2017. As of following data: that date, Abernethy has the following trial balance: Debit Credit $ 50,000 Accounts payable.. Accounts receivable.. Additional paid-in capital Buildings (net)(4-year remaining life) Cash and short-term investments $ 40,000 50,000 120,000 60,000 250,000 Common stock Equipment (net)(5-year remaining life) Inventory Land.... Long-term liabilities (mature 12/31/20) Retained earnings, 1/1/17.... . . Supplies Totals 200,000 90,000 80,000 150,000 100,000 10,000 $600,000 $600,000 During 2017, Abernethy reported net income of $80,000 while declaring and paying dividends of $10,000. During 2018, Abernethy reported net income of $1 10,000 while declaring and paying dividends of $30,000 19. Assume that Chapman Company acquired Abernethy's common stock for $490,000 in cash. As of January 1, 2017, 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, 2017, and December 31, 2018. 20. Assume that Chapman CompanyY Tu

Answer 1

1. Acquisition Schedule

Fair Value of Assets acquired	$
Land	90000
Building	160000
Equipment	180000
Accounts Receivable	40000
Cash & Short term Investments	60000
Inventory	90000
Supplies	10000
Less: Liabilities
Accounts Payable	50000
Long Term Liabiities	150000
Fair Value of Net assets	430000
Purchase Consideration	490000
Goodwill	60000
(not to be disclosed seperately in Equity Method)

2. JE on Parent's books for Investment : (Equity Method)

Date	Particulars	Dr.	Cr.
01-01-2017	Investment in Abernethy Dr	490000
	To Cash		490000
	(Being Net assets of fair value $430000 acquired and Goodwill of $60000 and paid in cash.)

3. Consolidation Worksheet JEs :

Date	Particulars	Dr.	Cr.
31-12-2017	Investment in Abernethy Dr	80000
	To P&L A/C		80000
	(Being Net Income of $80000 of subsidiary reported.)
31-12-2018	Investment in Abernethy Dr	110000
	To P&L A/C		110000
	(Being Net Income of $110000 of subsidiary reported.)

The Dividend received will be recorded seperately as below:

Date	Particulars	Dr.	Cr.
31-12-2017	Cash Dr	10000
	To Dividend Income A/C		10000
	(Being Dividend of $10000 received from subsidiary)
31-12-2018	Cash Dr	30000
	To Dividend Income A/C		30000
	(Being Dividend of $30000 received from subsidiary)

4. Ending Balance in the Investment Account :

Opening Balance	490000
Add:
Net Income of 2017	80000
Net Income of 2018	110000
Ending Balance of Investment as on 31-12-2018	680000