Assume that Chapman Company acquired Abernethy’s common stock for $490,000 in cash. As of January 1, 2011, Abernethy’s land had a fair value of $90,000, its buildings were valued at $160,000, and its...

Assume that Chapman Company acquired Abernethy’s common stock for $490,000 in cash. As of January 1, 2011, 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, 2011, and December 31, 2012. Chapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2011. As of that date, Abernethy has the following trial balance:
During 2011, Abernethy reported income of $80,000 while paying dividends of $10,000. During 2012, Abernethy reported income of $110,000 while paying dividends of$30,000.