Question
***I just need help calculating the Book Value of Atlanta*** I got 913,000 at one point and that was incorrect On July 1, 2018, Truman
***I just need help calculating the Book Value of Atlanta*** I got 913,000 at one point and that was incorrect
On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $820,575 in cash and equity securities. The remaining 30 percent of Atlantas shares traded closely near an average price that totaled $351,675 both before and after Trumans acquisition.
In reviewing its acquisition, Truman assigned a $133,000 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 2018. In addition, the subsidiarys income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.
| Truman | Atlanta | ||||||
| Revenues | $ | (714,210 | ) | $ | (509,000 | ) | |
| Operating expenses | 420,000 | 363,000 | |||||
| Income of subsidiary | (41,790 | ) | 0 | ||||
| Net income | $ | (336,000 | ) | $ | (146,000 | ) | |
| Retained earnings, 1/1/18 | $ | (898,000 | ) | $ | (583,000 | ) | |
| Net income (above) | (336,000 | ) | (146,000 | ) | |||
| Dividends declared | 145,000 | 60,000 | |||||
| Retained earnings, 12/31/18 | $ | (1,089,000 | ) | $ | (669,000 | ) | |
| Current assets | $ | 489,635 | $ | 460,000 | |||
| Investment in Atlanta | 841,365 | 0 | |||||
| Land | 433,000 | 236,000 | |||||
| Buildings | 712,000 | 678,000 | |||||
| Total assets | $ | 2,476,000 | $ | 1,374,000 | |||
| Liabilities | $ | (887,000 | ) | $ | (385,000 | ) | |
| Common stock | (95,000 | ) | (300,000 | ) | |||
| Additional paid-in capital | (405,000 | ) | (20,000 | ) | |||
| Retained earnings, 12/31/18 | (1,089,000 | ) | (669,000 | ) | |||
| Total liabilities and stockholders' equity | $ | (2,476,000 | ) | $ | (1,374,000 | ) | |
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How did Truman allocate Atlantas acquisition-date fair value to the various assets acquired and liabilities assumed in the combination?
| Consideration transferred by Truman | 820,575 |
| Noncontrolling interest fair value | 351,675 |
| Atlanta's acquisition-date total fair value | 1,172,250 |
| Book value of Atlanta | ??????? |
| Fair Value in excess of book value | |
| Excess fair value assigned | |
| Patent | 133,000 |
| Goodwill | (58,750) |
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Internal Auditors Manual And Guide The Practitioners Guide To Internal Auditing
Authors: Milton Stevens Fonorow
1st Edition
0134711947, 978-0134711942
