On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $835,275 in cash and equity securities. The remaining 30 percent of Atlantas shares traded closely near an average price that totaled $357,975 both before and after Trumans acquisition.

In reviewing its acquisition, Truman assigned a $140,000 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.

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.

Truman Atlanta Revenues Operating expenses Income of subsidiary (762,300) 494,000 56,700 (522,000) 332,000 Net income $ (325,000) (19e,000) (853,000) (587,000) Retained earnings, 1/1/18 Net income (above) Dividends declared (190,000) 160,00070,000 ,018,000) (707,000) 305,525 453,000 (325,000) (1, Retained earnings, 12/31/18 Current assets Investment in Atlanta Land Buildings 867,475 456,000 796,000 276,000 702,000 $ 1,431,000 Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/18 (907,000) (404,00 (95,000) (405,000) 0) (300,000) (20,000) 1,818,000)(787,e08) $ (2,425,000) (1,431,000) Total liabilities and stockholders' equity