On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $829,500 in cash and equity securities. The remaining 30 percent of Atlantas shares traded closely near an average price that totaled $355,500 both before and after Trumans acquisition. In reviewing its acquisition, Truman assigned a $127,500 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 $ (739,075 ) $ (479,000 )

Operating expenses 403,000 308,000

Income of subsidiary (50,925 ) 0

Net income $ (387,000 ) $ (171,000 )

Retained earnings, 1/1/18 $ (915,000 ) $ (589,000 )

Net income (above) (387,000 ) (171,000 )

Dividends declared 150,000 60,000

Retained earnings, 12/31/18 $ (1,152,000 ) $ (700,000 )

Current assets $ 514,575 $ 402,000

Investment in Atlanta 859,425 0

Land 444,000 225,000

Buildings 715,000 713,000

Total assets $ 2,533,000 $ 1,340,000

Liabilities $ (881,000 ) $ (320,000 )

Common stock (95,000 ) (300,000 )

Additional paid-in capital (405,000 ) (20,000 )

Retained earnings, 12/31/18 (1,152,000 ) (700,000 )

Total liabilities and stockholders' equity $ (2,533,000 ) $ (1,340,000 )

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

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

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

4. 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.