On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $789,250 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $338,250 both before and after Truman’s acquisition.In reviewing its acquisition, Truman assigned a $136,500 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 2018. In addition, the subsidiary’s income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.

	Truman				Atlanta
Revenues	$	(802,355	)		$	(559,000	)
Operating expenses		477,000				367,000
Income of subsidiary		(57,645	)			0
Net income	$	(383,000	)		$	(192,000	)
Retained earnings, 1/1/18	$	(848,000	)		$	(518,000	)
Net income (above)		(383,000	)			(192,000	)
Dividends declared		155,000				70,000
Retained earnings, 12/31/18	$	(1,076,000	)		$	(640,000	)
Current assets	$	475,605			$	514,000
Investment in Atlanta		822,395				0
Land		451,000				213,000
Buildings		705,000				636,000
Total assets	$	2,454,000			$	1,363,000
Liabilities	$	(878,000	)		$	(403,000	)
Common stock		(95,000	)			(300,000	)
Additional paid-in capital		(405,000	)			(20,000	)
Retained earnings, 12/31/18		(1,076,000	)			(640,000	)
Total liabilities and stockholders' equity	$	(2,454,000	)		$	(1,363,000	)

1.How did Truman allocate Atlanta’s acquisition-date fair value to the various assets acquired and liabilities assumed in the combination 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 2018? 4. 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.  

Questions:

How to get book value $899,000 on answer Part A?

How to get $24,705 at noncontrolling interest on answer Part D?

How to get (S) $183,500, $629,300 & $269,700 on answer Part D ?

Answer rating: 100% (QA)

To calculate the book value of 899000 in answer Part A Truman allocated Atlantas acquisitiondate fai... View the full answer