On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $763,175 in cash and equity securities. The remaining 30 percent of Atlantas shares traded closely near an average price that totaled $327,075 both before and after Trumans acquisition.

In reviewing its acquisition, Truman assigned a $104,500 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 2021. In addition, the subsidiarys income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.

	Truman				Atlanta
Revenues	$	(715,065	)		$	(470,000	)
Operating expenses		441,000				295,000
Income of subsidiary		(53,935	)			0
Net income	$	(328,000	)		$	(175,000	)
Retained earnings, 1/1/21	$	(920,000	)		$	(546,000	)
Net income (above)		(328,000	)			(175,000	)
Dividends declared		140,000				90,000
Retained earnings, 12/31/21	$	(1,108,000	)		$	(631,000	)
Current assets	$	516,390			$	466,000
Investment in Atlanta		785,610				0
Land		412,000				271,000
Buildings		752,000				652,000
Total assets	$	2,466,000			$	1,389,000
Liabilities	$	(858,000	)		$	(438,000	)
Common stock		(95,000	)			(300,000	)
Additional paid-in capital		(405,000	)			(20,000	)
Retained earnings, 12/31/21		(1,108,000	)			(631,000	)
Total liabilities and stockholders' equity	$	(2,466,000	)		$	(1,389,000	)

1. What is the excess fair-value assigned to patent and goodwill?

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 2021?

4. Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2021. At year-end, there were no intra-entity receivables or payables.

Required A Required B Required C Required D What is the excess fair-value assigned to patent and goodwill? Patent Goodwill Required A Required B Required C Required D How did Truman allocate the goodwill from the acquisition across the controlling and noncontrolling interests? Controlling Noncontrolling Interest Interest Goodwill Required A Required B Required C Required D How did Truman derive the Investment in Atlanta account balance at the end of 2021? Initial value at acquisition date Equity in earnings of Atlanta Dividends 2021 Investment account balance 12/31/21 TRUMAN COMPANY AND ATLANTA COMPANY Consolidation Worksheet For Year Ending December 31, 2021 Truman Atlanta Consolidation Entries Company Company Debit Credit $ (715,065) $ (470,000) 441,000 295,000 (53,935) 0 $ (328,000) $ (175,000) Noncontrolling Consolidated Interest 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, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 $ (920,000) $ (328,000) 140.000 $ (1,108,000) $ (546,000) (175,000) 90,000 (631,000) $ 466,000 0 Current assets Investment in Atlanta Land Buildings Patent 516,390 $ 785,610 412,000 752,000 271,000 652,000 $ Goodwill Total assets Liabilities Common stock Additional paid in capital Retained earnings, 12/31/21 Noncontrolling interest 7/1 Noncontrolling interest 12/31 Total liabilities and stockholders' equity 2,466,000 $ (858,000) $ (95,000) (405,000) (1,108,000) 1,389,000 (438,000) (300,000) (20,000) (631,000) 0 $ (2,466,000) $ (1,389,000) $ 0$ 0