On July 1, 2021, Truman Company acquired a 70 percent interest Atlanta Company in exchange for consideration of $764,050 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $327,450 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $108,000 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 2021. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. $ Atlanta (445,000) 322,000 0 Revenues Operating expenses Income of subsidiary Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Retained earnings, 12/31/21 Current assets Investment in Atlanta Land Buildings Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and stockholders' equity Truman $ (693,510) 421,000 (35,490) $ (308,000) $ (849,000) (308,000) 160,000 $ (997,000) $ 411,960 768,040 470,000 726,000 $ 2,376,000 $ (879,000) (95,000) (405,000) (997,000) $(2,376,000) $ (123,000) $ (567,000) (123,000) 90,000 $ (600,000) $ 408,000 0 246,000 633,000 $ 1,287,000 $ (367,000) (300,000) (20,000) (600,000) $(1,287,000) a. What is the excess fair-value assigned to patent and goodwill? 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 2021? d. 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 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 Required A Required B Required C Required D Required C Required D 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. (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. Input all amounts as positive values.) Show less A Consolidation Entries Debit Credit Noncontrolling Consolidated Interest Totals Revenues Truman Atlanta Company Company $ (693,510) $ (445,000) 421,000 322,000 (35,490) 0 $ (308,000) $ (123,000) Operating expenses Net income of subsidiary Separate company net income Consolidated net income Net income attributable to NCI Net income attributable to Truman $ (849,000) $ Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 (308,000) 160,000 (997,000) $ (567,000) (123,000) 90,000 (600,000) $ Current assets $ $ 408,000 411,960 768,040 Investment in Atlanta 0 Land 470,000 246,000 726,000 633,000 Buildings Patent Goodwill Total assets Liabilities Common stock $ $ 2,376,000 $ 1,287,000 (879,000) $ (367,000) (95,000) (300,000) (405,000) (20,000) (997,000) (600,000) Additional paid in capital Retained earnings, 12/31/21 Noncontrolling interest 7/1 Noncontrolling interest 12/31 Total liabilities and stockholders' equity $ (2,376,000) $ (1,287,000)
