On July 1, 2024, Truman Company acquired a 70 percent interest in Atlanta Company in exchange...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On July 1, 2024, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $801,900 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $325,100 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $129,500 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 2024. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. Revenues Operating expenses Income of subsidiary Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Items Retained earnings, 12/31/24 Current assets Investment in Atlanta Land Buildings Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/24 Total liabilities and stockholders' equity Truman $ (785,065) 486,000 (60,935) $ (360,000) $ (911,000) (360,000) 170,000 $ (1,101,000) $ 379,665 838,335 435,000 775,000 $ 2,428,000 $ (827,000) (95,000) (405,000) (1,101,000) Atlanta $ (533,000) 333,000 0 $ (200,000) $ (535,000) (200,000) 70,000 $ (665,000) $ 415,000 0 283,000 697,000 $ 1,395,000 $ (410,000) (300,000) (20,000) (665,000) $ (2,428,000) $ (1,395,000) Required: 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 2024? d. Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2024. At year-end, there were no intra-entity receivables or payables. On July 1, 2024, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $801,900 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $325,100 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $129,500 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 2024. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. Revenues Operating expenses Income of subsidiary Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Items Retained earnings, 12/31/24 Current assets Investment in Atlanta Land Buildings Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/24 Total liabilities and stockholders' equity Truman $ (785,065) 486,000 (60,935) $ (360,000) $ (911,000) (360,000) 170,000 $ (1,101,000) $ 379,665 838,335 435,000 775,000 $ 2,428,000 $ (827,000) (95,000) (405,000) (1,101,000) Atlanta $ (533,000) 333,000 0 $ (200,000) $ (535,000) (200,000) 70,000 $ (665,000) $ 415,000 0 283,000 697,000 $ 1,395,000 $ (410,000) (300,000) (20,000) (665,000) $ (2,428,000) $ (1,395,000) Required: 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 2024? d. Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2024. At year-end, there were no intra-entity receivables or payables.
Expert Answer:
Related Book For
Fundamentals of Advanced Accounting
ISBN: 978-0077667061
5th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Posted Date:
Students also viewed these accounting questions
-
On July 1, 2013, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $720,000 in cash and equity securities. The remaining 30 percent of Atlanta's shares...
-
On July 1, 2011, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $720,000 in cash and equity securities. The remaining 30 percent of Atlantas shares...
-
The management accountant is preparing the master budget for her retail firm. The following information has been supplied Sales $300,000 Opening inventory $40,000 Closing inventory $60,000 Required...
-
The magnetization within a bar of some metal alloy is 3.2 105 A/m at an H field of 50 A/m. Compute the following: (a) The magnetic susceptibility. (b) The permeability. (c) The magnetic flux density...
-
Explain all of the items displayed by the MINIX 3 sysenv command on your MINIX 3 system. If you do not have access to a running MINIX 3 system, explain the items in Fig. 2-37. rootdev=904...
-
Explain why composition of the Board of Directors is important.
-
Kinder Company has these comparative balance sheet data: Additional information for 2014: 1. Net income was $25,000. 2. Sales on account were $375,000. Sales returns and allowances amounted to...
-
In the space provided, 150- to 350-word summary of your financial analysis from Part 2: Financial Ratio Calculations. Include the following in your summary: Make final recommendations as to whether...
-
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 34,000 Rets per year. Costs associated with this level of production and...
-
Product Sales Value per unit at Split-off Separable Processing Costs per unit after Split-off Sales Value per unit at Completion A $12 $9 $22 B 10 4 17 C 15 6 19 If Product B is processed beyond the...
-
AreaVicki owns and operates a baby food manufacturing business (as a sole proprietorship). During 2023, she incurred expenses of 240,000 in research and experimental expenditures. For regular tax...
-
Bank of Skagit issues 10-year bonds with a maturity date of 2032 and an annual simple interest rate of 5.8% The interest is paid semi-annually. Clayton buys a $10,000 bond. Determine the following:...
-
Assignment : Introduction to digital research tools and identifying an online revenue model. Percentage of total grade: 20% Due date: By end of Week 3 This assignment will serve as an introduction to...
-
Let E1 and E2 be equivalence relations on some set A. (a) Is E UE2 an equivalence relation on A? (b) Is E E2 an equivalence relation on A?
-
What conditions would suggest that a company should buy a training program from an outside vendor? Which would suggest that the firm should develop the program itself?
-
In the synthesis of the keto acid just given, the dicarboxylic acid decarboxylates in a specific way; it gives Explain. HO rather than HO
-
The financial statements for the business of Jets Ski Equipment are shown below. Additional information 1. All purchases and sales of inventories are on credit. 2. On 1 July 2019, J. Waters injected...
-
Some of the most recent financial statements for Hyland Pty Ltd are shown below. Additional information 1. All purchases and sales of inventories are on credit. 2. On 1 July 2020, the shareholders...
-
The statement of cash flows for Cash4Cars Ltd follows. Ignore GST. Required (a) Explain the information that would be presented in Note 29 of Cash4Cars Ltds financial statements. (b) Explain the...
Study smarter with the SolutionInn App