On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $788,900 in cash and equity securities The remaining 30 percent of Atlantas shares traded closely near an average price that totaled $338,100 both before and after Trumans acquisition In reviewing its acquisition, Truman assigned a $129,500 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 subsidiarys income was earned uniformly throughout the year The subsidiary declared dividends quarterly Truman Atlanta Revenues $ (785,065 ) $ (533,000 ) Operating expenses 486,000 333,000 Income of subsidiary (60,935 ) 0 Net income $ (360,000 ) $ (200,000 ) Retained earnings, 1 1 18 $ (911,000 ) $ (535,000 ) Net income (above) (360,000 ) (200,000 ) Dividends declared 170,000 70,000 Retained earnings, 12 31 18 $ (1,101,000 ) $ (665,000 ) Current assets $ 392,665 $ 415,000 Investment in Atlanta 825,335 0 Land 435,000 283,000 Buildings 775,000 697,000 Total assets $ 2,428,000 $ 1,395,000 Liabilities $ (827,000 ) $ (410,000 ) Common stock (95,000 ) (300,000 ) Additional paid in capital (405,000 ) (20,000 ) Retained earnings, 12 31 18 (1,101,000 ) (665,000 ) Total liabilities and stockholders' equity $ (2,428,000 ) $ (1,395,000 ) a 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 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 payables a How did Truman allocate Atlantas acquisition date fair value to the various assets acquired and liabilities assumed in the combination Consideration transferred by Truman Noncontrolling interest fair value Atlantas acquisition date total fair value Book value of Atlanta Fair value in excess of book value Excess fair value assigned Patent Goodwill b How did Truman allocate the goodwill from the acquisition across the controlling and noncontrolling interests Controlling Interest Noncontrolling Interest Goodwill c How did Truman derive the Investment in Atlanta account balance at the end of 2018 Initial value at acquisition date Trumans share of Atlantas net income for half year Dividends 2018 Investment account balance 12 31 18 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 Noncontrolling Consolidated Company Company Debit Credit Interest Totals Revenues $(785,065) $(533,000) Operating expenses 486,000 333,000 Net income of subsidiary (60,935) Separate company net income $(360,000) $(200,000) Consolidated net income Net income attributable to NCI Net income attributable to Truman Retained earnings, 1 1 $(911,000) $(535,000) Net income (360,000) (200,000) Dividends declared 170,000 70,000 Retained earnings 12 31 $(1,101,000) $(665,000) Current assets $392,665 $415,000 Investment in Atlanta 825,335 Land 435,000 283,000 Buildings 775,000 697,000 Patent Goodwill Total assets $2,428,000 $1,395,000 Liabilities $(827,000) $(410,000) Common stock (95,000) (300,000) Additional paid in capital (405,000) (20,000) Retained earnings 12 31 (1,101,000) (665,000) Noncontrolling interest 7 1 Noncontrolling interest 12 31 Total liabilities and equity $(2,428,000) $(1,395,000)

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On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $788,900 in cash and equity securities.

On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $788,900 in cash and equity securities. The remaining 30 percent of Atlantas shares traded closely near an average price that totaled $338,100 both before and after Trumans acquisition.

In reviewing its acquisition, Truman assigned a $129,500 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 subsidiarys income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.

	Truman			Atlanta
Revenues	$	(785,065	)	$	(533,000	)
Operating expenses		486,000			333,000
Income of subsidiary		(60,935	)		0
Net income	$	(360,000	)	$	(200,000	)
Retained earnings, 1/1/18	$	(911,000	)	$	(535,000	)
Net income (above)		(360,000	)		(200,000	)
Dividends declared		170,000			70,000
Retained earnings, 12/31/18	$	(1,101,000	)	$	(665,000	)
Current assets	$	392,665		$	415,000
Investment in Atlanta		825,335			0
Land		435,000			283,000
Buildings		775,000			697,000
Total assets	$	2,428,000		$	1,395,000
Liabilities	$	(827,000	)	$	(410,000	)
Common stock		(95,000	)		(300,000	)
Additional paid-in capital		(405,000	)		(20,000	)
Retained earnings, 12/31/18		(1,101,000	)		(665,000	)
Total liabilities and stockholders' equity	$	(2,428,000	)	$	(1,395,000	)

a.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 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 payables.

How did Truman allocate Atlantas acquisition-date fair value to the various assets acquired and liabilities assumed in the combination?


Consideration transferred by Truman
Noncontrolling interest fair value
Atlantas acquisition-date total fair value
Book value of Atlanta
Fair value in excess of book value
Excess fair value assigned:
Patent
Goodwill

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

	Controlling Interest	Noncontrolling Interest
Goodwill

c. How did Truman derive the Investment in Atlanta account balance at the end of 2018?


Initial value at acquisition date
Trumans share of Atlantas net income for half year
Dividends 2018
Investment account balance 12/31/18

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.)

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TRUMAN COMPANY AND SUBSIDIARY ATLANTA COMPANY
Consolidation Worksheet
For Year Ending December 31, 2018
	Truman	Atlanta	Consolidation Entries		Noncontrolling	Consolidated
	Company	Company	Debit	Credit	Interest	Totals
Revenues	$(785,065)	$(533,000)
Operating expenses	486,000	333,000
Net income of subsidiary	(60,935)
Separate company net income	$(360,000)	$(200,000)
Consolidated net income
Net income attributable to NCI
Net income attributable to Truman

Retained earnings, 1/1	$(911,000)	$(535,000)
Net income	(360,000)	(200,000)
Dividends declared	170,000	70,000
Retained earnings 12/31	$(1,101,000)	$(665,000)

Current assets	$392,665	$415,000
Investment in Atlanta	825,335
Land	435,000	283,000
Buildings	775,000	697,000
Patent
Goodwill
Total assets	$2,428,000	$1,395,000
Liabilities	$(827,000)	$(410,000)
Common stock	(95,000)	(300,000)
Additional paid in capital	(405,000)	(20,000)
Retained earnings 12/31	(1,101,000)	(665,000)
Noncontrolling interest 7/1
Noncontrolling interest 12/31
Total liabilities and equity	$(2,428,000)	$(1,395,000)