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On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $749,000 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $321,000 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $112,500 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 2018. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. Atlanta $ (468,000) 314,000 $ $ $ Revenues Operating expenses Income of subsidiary Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Current assets Investment in Atlanta Land Buildings Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/18 Total liabilities and stockholders' equity Truman $ (742,975) 476,000 (46,025) $ (313,000) $ (906,000) (313,000) 160,000 $ (1,059,000) $ 504,975 767,025 465,000 720,000 $ 2,457,000 $ (898,000) (95,000) (405,000) (1,059,000) $ (2,457,000) (154,000) (510,000) (154,000) 80,000 (584,000) 404,000 $ 241,000 646,000 $ 1,291,000 (387,000) (300,000) (20,000) (584,000) $ (1,291,000) a. How did Truman allocate Atlanta's acquisition-date fair value to the various assets acquired and liabilities 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 2018? d. Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2018. At year-end, there were no intra entity receivables or nayables Complete this question by entering your answers in the tabs below. Required A Required B Required Required D How did Truman allocate Atlanta's acquisition-date fair value to the various assets acquired and liabilities assumed in the combination? Consideration transferred by Truman Noncontrolling interest fair value Atlanta's acquisition-date total fair value Book value of Atlanta Fair value in excess of book value Excess fair value assigned: Patent Goodwill Required A Required B > Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D How did Truman allocate the goodwill from the acquisition across the controlling and noncontrolling interests? Controlling Noncontrolling Interest Interest Goodwill Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D How did Truman derive the Investment in Atlanta account balance at the end of 2018? Initial value at acquisition date Truman's share of Atlanta's net income for half year Dividends 2018 Investment account balance 12/31/18 Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2018. At year-end, there were no intra- entity receivables or payables. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.) Show less TRUMAN COMPANY AND SUBSIDIARY ATLANTA COMPANY Consolidation Worksheet For Year Ending December 31, 2018 Truman Atlanta Consolidation Entries Company Company Debit Credit $ (742.975) $ (468,000) 476,000 314,000 (46,025) $ (313,000 $ (154,000) Noncontrolling Consolidated Interest Totals Revenues Operating expenses Net income of subsidiary Separate company net income Consolidated net income Net income attributable to NCI Net income attributable to Truman Retained earnings, 1/1 Net income Dividends declared Retained earnings 12/31 $ (906,000) $ (313,000) 160,000 $ (1,059,000) $ (510,000) (154,000) 80,000 (584,000) Current assets $ 404,000 Investment in Atlanta Land 504,975 $ 767,025 465.000 720,000 241,000 646,000 Buildings Patent Goodwill Total assets Liabilities Common stock Additional paid in capital Retained earnings 12/31 Noncontrolling interest 7/1 Noncontrolling interest 12/31 Total liabilities and equity $ 2,457,000 $ 1,291,000 $ (898,000) $ (387,000) (95,000) (300,000) (405,000) (20,000) (1,059,000) (584,000) $ (2,457,000) $ (1,291,000)
