Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2009. As of that...

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Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2009. As of that date, Abernethy has the following trial balance: During 2009,
 Abernethy reported income of $80,000 while paying dividends of $10,000. During 2010, Abernethy reported income of $110,000 while paying dividends of $30,000. 17.
 Assume that Chapman Company acquired Abernethy's common stock for $490,000 in cash. As of January 1, 2009, 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, 2009, and December 31, XXXXXXXXXXHoyle 126) Hoyle, Joe Ben. Fundamentals of Advanced Accounting with Dynamic Accounting PowerWeband CPA
 Success SG Coupon, 3rd Edition. McGraw-Hill Learning Solutions, 2009. .

Robert · Accepted Answer

Purchase Price Allocation and Annual Amortization: 
 Purchase price of Abernethy  ...................................  $490,000 
 Book value (assets minus 
  liabilities or total stockholders' 
  equity)  ..................................................................  (400,000) 
 Excess cost over book value  ...................................  $ 90,000 
 Excess cost assigned to specific 
 accounts based on fair market  Annual Excess 
 values Life Amortizations 
 - Land  ........................................  $10,000   --- --- 
 - Buildings  ................................    40,000   4 yrs. $10,000 
 - Equipment  ..............................  (20,000)    5 yrs.   (4,000) 
 
  Total assigned to specific 
   accounts  ........................       30,000 
 Goodwill  ...................................  $ 60,000     Indefinite           0 
  Total  ....................................    $ 6,000 
 
 Consolidation Entries as of December 31, 2009 
 Entry S 
  Common Stock—Abernethy ................................  250,000 
  Additional Paid-in Capital  ...................................    50,000 
  Retained Earnings - 1/1/02  ..................................  100,000 
   Investment in Abernethy  ...............................   400,

Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2009. As of that date, Abernethy has the following trial balance: During 2009, Abernethy reported income of $80,000 while...

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