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On July 1, 2015, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $767,200 in cash and equity securities.

On July 1, 2015, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $767,200 in cash and equity securities. The remaining 30 percent of Atlantas shares traded closely near an average price that totaled $328,800 both before and after Trumans acquisition. In reviewing its acquisition, Truman assigned a $138,500 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 2015. In addition, the subsidiarys income was earned uniformly throughout the year. Subsidiary dividend payments were made quarterly.

Truman Atlanta
Revenues $ (761695) $ 497,000
Income of subsidiary (39305)
Operating expenses 489000 357000
Net income $ (312000) $ (140000)
Retained earnings, 1/1/15 $ (883000) $ (516000)
Net income (312000) (140000)
Dividends declared 140000 70000

Retained earnings, 12/31/15 $ (1055000) $ (586000)
Current assets $ 484995 $ 433000
Investment in Atlanta 782005
Land 431000 233000
Buildings 749000 659000
Total assets $ 2447000 $ 1325000
Liabilities $ (892000) $ (419000)
Common stock (95,000) (300,000)
Additional paid-in capital (405,000) (20,000)
Retained earnings (1055000) (586000)
Total liabilities and stockholders' equity $ (2447000) $ (1325000)

1. How did Truman allocate Atlantas 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 2015?

d.

Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2015. (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.)

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