On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange...
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On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $756,525 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $324,225 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $130,500 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 avallable for these two companies for 2021. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. Truman Atlanta $ (811,435) 474,000 (54,565) $ (507,000) 325,000 Revenues Operating expensen Income of subsidiary Net income $ (392,000) $ (182,000) $ (919,000) (392,000) 140,000 $(1,171,000) 579,410 779,590 478,000 746,000 $ 2,503,000 * (502,000) (182,000) 90,000 Retained earninga, 1/1/21 Net Income (above) Dividenda declared Retained earnings, 12/31/21 $ (594,000) Current assets 421,000 Investment in Atlanta Land nuildings Total asnets 275,000 666,000 $1,362,000 Liabilities * (912,000) * (448,000) On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $756,525 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $324,225 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $130,500 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 avallable for these two companies for 2021. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. Truman Atlanta $ (811,435) 474,000 (54,565) $ (507,000) 325,000 Revenues Operating expensen Income of subsidiary Net income $ (392,000) $ (182,000) $ (919,000) (392,000) 140,000 $(1,171,000) 579,410 779,590 478,000 746,000 $ 2,503,000 * (502,000) (182,000) 90,000 Retained earninga, 1/1/21 Net Income (above) Dividenda declared Retained earnings, 12/31/21 $ (594,000) Current assets 421,000 Investment in Atlanta Land nuildings Total asnets 275,000 666,000 $1,362,000 Liabilities * (912,000) * (448,000) (912,000) (95,000) (405,000) (1,171,000) $ (2,583,000) $ (448,000) (300,000) (20,000) (594,000) $(1,362,000) Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and stockholders' equity 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. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D What is the excess fair-value assigned to patent and goodwill? Patent Goodwill Complete this question by entering your answers in the tabs below. 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 C> Complete this question by entering your answers in the tabs below. 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 B Required D > TRUMAN COMPANY AND ATLANTA COMPANY Consolidation Workaheet For Year Ending December 31, 2021 Truman Atlanta Consolidation Entries Noncontrolling Consolidated Company Totals Company (811,435) $ (507,000) 325,000 Debit Credit Interest Revenues Operating expenses 474,000 Net income of subsidary Separate company net income (54,565) S (392.000)S (182.000) Consolidated net income Net income atributable to NCI Net income attributable to Truman S (010.000) $ (502.000) Retained earmrings, 1/1/21 Net income Dividends declared (302.000) (182.000) 00,000 S (1,171,000) S (594,000) 140,000 Retained eamings, 12/31/21 Current assets 579,410 421,000 Investment in Atlanta 779,590 liand 47A 000 275.000 naiDnan enuanIain Ionn'ne Retained earnings, 12/31/21 $ (1,171,000)S (594,000) Current assets 579,410 $ 421,000 Investment in Atlanta 779,590 Land 478,000 275,000 Buildings 746,000 666,000 Patent Goodwill $ 2,583,000 $ 1,362,000 (912,000) $ Total assets Liabilities (448,000) Common stock (95,000) (300,000) Additional paid in capital (405,000) (20,000) Retained earnings, 12/31/21 Noncontrolling interest 7/1 (1,171,000) (594,000) Noncontrolling interest 12/31 Total liabilities and stockholders' equity $ (2,583,000) $ (1,362,000) $ On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $756,525 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $324,225 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $130,500 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 avallable for these two companies for 2021. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. Truman Atlanta $ (811,435) 474,000 (54,565) $ (507,000) 325,000 Revenues Operating expensen Income of subsidiary Net income $ (392,000) $ (182,000) $ (919,000) (392,000) 140,000 $(1,171,000) 579,410 779,590 478,000 746,000 $ 2,503,000 * (502,000) (182,000) 90,000 Retained earninga, 1/1/21 Net Income (above) Dividenda declared Retained earnings, 12/31/21 $ (594,000) Current assets 421,000 Investment in Atlanta Land nuildings Total asnets 275,000 666,000 $1,362,000 Liabilities * (912,000) * (448,000) On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $756,525 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $324,225 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $130,500 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 avallable for these two companies for 2021. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. Truman Atlanta $ (811,435) 474,000 (54,565) $ (507,000) 325,000 Revenues Operating expensen Income of subsidiary Net income $ (392,000) $ (182,000) $ (919,000) (392,000) 140,000 $(1,171,000) 579,410 779,590 478,000 746,000 $ 2,503,000 * (502,000) (182,000) 90,000 Retained earninga, 1/1/21 Net Income (above) Dividenda declared Retained earnings, 12/31/21 $ (594,000) Current assets 421,000 Investment in Atlanta Land nuildings Total asnets 275,000 666,000 $1,362,000 Liabilities * (912,000) * (448,000) (912,000) (95,000) (405,000) (1,171,000) $ (2,583,000) $ (448,000) (300,000) (20,000) (594,000) $(1,362,000) Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and stockholders' equity 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. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D What is the excess fair-value assigned to patent and goodwill? Patent Goodwill Complete this question by entering your answers in the tabs below. 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 C> Complete this question by entering your answers in the tabs below. 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 B Required D > TRUMAN COMPANY AND ATLANTA COMPANY Consolidation Workaheet For Year Ending December 31, 2021 Truman Atlanta Consolidation Entries Noncontrolling Consolidated Company Totals Company (811,435) $ (507,000) 325,000 Debit Credit Interest Revenues Operating expenses 474,000 Net income of subsidary Separate company net income (54,565) S (392.000)S (182.000) Consolidated net income Net income atributable to NCI Net income attributable to Truman S (010.000) $ (502.000) Retained earmrings, 1/1/21 Net income Dividends declared (302.000) (182.000) 00,000 S (1,171,000) S (594,000) 140,000 Retained eamings, 12/31/21 Current assets 579,410 421,000 Investment in Atlanta 779,590 liand 47A 000 275.000 naiDnan enuanIain Ionn'ne Retained earnings, 12/31/21 $ (1,171,000)S (594,000) Current assets 579,410 $ 421,000 Investment in Atlanta 779,590 Land 478,000 275,000 Buildings 746,000 666,000 Patent Goodwill $ 2,583,000 $ 1,362,000 (912,000) $ Total assets Liabilities (448,000) Common stock (95,000) (300,000) Additional paid in capital (405,000) (20,000) Retained earnings, 12/31/21 Noncontrolling interest 7/1 (1,171,000) (594,000) Noncontrolling interest 12/31 Total liabilities and stockholders' equity $ (2,583,000) $ (1,362,000) $
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Fundamentals of Advanced Accounting
ISBN: 978-0077667061
5th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
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