On July 1,2009, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $720,000 in cash and equity securities. The remaining 30 percent ofAtlanta’s shares traded closely near an average price that totaled $290,000 both before and after Truman’s acquisition. LO6 In reviewing its acquisition, Truman assigned a $ 100,000 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is anticipated to have a remaining life of five years.

The following financial information is available for these two companies for 2009. In addition, the subsidiary’s income was earned uniformly throughout the year. Subsidiary dividend payments were made quarterly.

Truman Atlanta Revenues.

$ (670,000)

$

(400,000)

Operating expenses.

402,000 280,000 Income of subsidiary.

(35,000)

Net income.

$ (303,000)

$

(120,000)

Retained earnings, 1/1/09 .

$ (823,000)

$

(500,000)

Net income (above).

(303,000)

(120,000)

Dividends paid.

145,000 80,000 Retained earnings, 12/31/09 ..

$ (981,000)

$

(540,000)

Current assets.

$ 481,000

$

390,000 Investment in Atlanta.

727,000 Land.

200,000 Buildings.

630,000 Totalassets.

$ 1,220,000 Liabilities.

$

(360,000)

Common stock.

(95,000)

(300,000)

Additional paid-in capital.

(405,000)

(20,000)

Retained earnings, 12/31/09

(981,000)

(540,000)

Total liabilities and stockholders' equity

$(2,297,000)

$(1,220,000)

Answer each ofthe following:

a. How did Truman allocate Atlanta’s acquisition-date fair value to the various assets acquired and lia¬ bilities assumed in the combination?

b. How did Truman allocate the goodwill from the acquisition across the controlling and noncontrolling interests?

c. How did Truman derive the Investment in Atlanta account balance at the end of 2009?

d. Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2009.