On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $756,525 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $324,225 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $130,500 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 (507,000) 325,000 $ $ 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 $ (811, 435) 474,000 (54, 565) $ (392,000) $ (919,000) (392,000) 140,000 $(1,171,000) $ 579,410 779,590 478,000 746,000 $ 2,583,000 $ (912,000) (95,000) (405,000) (1,171,000) $(2,583,000) (182,000) (502,000) (182.000) 90,000 (594,000) 421,000 275,000 666,000 $1,362,000 $ (448,000) (300,000) (20,000) (594, 000) $(1,362,000) 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 payables. TRUMAN COMPANY AND SUBSIDIARY ATLANTA COMPANY Consolidation Worksheet For Year Ending December 31, 2018 Truman Atlanta Consolidation Entries Company Company Debit Credit $ (811,435) $ (507.000) 474,000 325,000 (54,565) $ (392,000) $ (182,000) Noncontrolling Interest Consolidated 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 (919.000) (392,000) 140,000 $ (502,000) (182,000) 90,000 $ (594.000) 106 1 Retained earnings 12/31 (1,171,000) $ $ 421,000 Current assets Investment in Atlanta Land Buildings Patent 579,410 779,590 Azg000 275.000 746,000 666,000 Goodwill Total assets $ 2,583,000 $ 1,362,000 900 100 Liabilities Common stock Additional paid in capital Retained earnings 12/31 Noncontrolling interest 7/1 Noncontrolling interest 12/31 Total liabilities and equity $ (912,000) (95,000) (405,000) (1,171,000) $ (448,000) (300,000) (20,000) (594,000) 0 12,583,000) $1,362,000) o s 0 0