To prepare the consolidation worksheet entries, we first need to calculate the excess of investment cost over book value of Abernethy's net assets. The book value of Abernethy's net assets is calculated as the total of common stock, additional paid-in capital, and retained earnings. The fair values of land, buildings, and equipment need to be taken into account as well.
On January 1, 2020, the book value of Abernethy's net assets is: $250,000 (common stock) + $50,000 (additional paid-in capital) + $323,600 (retained earnings) = $623,600
The fair value of Abernethy's land, buildings, and equipment is: $101,000 (land) + $242,000 (buildings) + $279,500 (equipment) = $622,500
The excess of investment cost over book value is: $733,100 (investment cost) - $622,500 (fair value of net assets) = $110,600
The entries for 2020 would be:
1. Investment in Abernethy Company 733,100
Common Stock - Abernethy 250,000
Additional Paid-In Capital - Abernethy 50,000
Retained Earnings - Abernethy 323,600
Land 10,500
Buildings 68,000
Equipment -35,500
Goodwill 66,500
2. Investment in Abernethy Company 129,000
Equity in Subsidiary Earnings 129,000
3. Equity in Subsidiary Earnings 16,000
Investment in Abernethy Company 16,000
For 2021:
1. Investment in Abernethy Company 176,000
Equity in Subsidiary Earnings 176,000
2. Equity in Subsidiary Earnings 38,000
Investment in Abernethy Company 38,000
Please note that the calculations and entries above are simplified and actual consolidation entries might require more detailed calculations and adjustments.