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 $835,275 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $357,975 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $140,000 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. 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 $ Truman (762,300) Atlanta (522,000) 494,000 332,000 (56,700) 0 $ (325,000) $ (190,000) $ (853,000) $ (587,000) (325,000) (190,000) 160,000 $ (1,018,000) $ 70,000 (707,000) $ 305,525 $ 867,475 453,000 0 456,000 276,000 796,000 702,000 $ 2,425,000 $ 1,431,000 Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/21 $ (907,000) $ (404,000) (95,000) (405,000) (1,018,000) (300,000) (20,000) (707,000) Total liabilities and stockholders' equity $ (2,425,000) $ (1,431,000) 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 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.) Revenues Operating expenses Net income of subsidiary Separate company net income Consolidated net income Net income attributable to NCI Net income attributable to Truman TRUMAN COMPANY AND ATLANTA COMPANY Consolidation Worksheet For Year Ending December 31, 2021 Truman Company Atlanta Company Consolidation Entries Noncontrolling $ (762,300) $ (522,000) Debit 261,000 Credit Interest Consolidated Totals $ (1,023,300) ( 494,000 332,000 14,000 166,000 674,000 (56,700) (325,000) 0 56,700 $ (190,000) Retained earnings, 1/1/21 $ (853,000) (587,000) 587,000 Net income Dividends declared (325,000) 160,000 (190,000) 70,000 $ Retained earnings, 12/31/21 (1,018,000) $ (707,000) Current assets Investment in Atlanta Land Buildings Patent 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 $ (349,300) (24,300) 24,300 $ (325,000) (853,000) (325,000) 35,000 10,500 $ 160,000 $ 305,525 $ 453,000 867,475 456,000 0 276,000 796,000 702,000 140,000 86,250 14,000 $ 2,425,000 $ 1,431,000 $ (907,000) $ (404,000) (95,000) (405,000) (1,018,000) (300,000) (20,000) 300,000 20,000 (707,000) (34,800) $ 1,464,950 $ 215,000 (2,425,000) (1,431,000) $ 758,525 732,000 1,498,000 126,000 86,250 $ 3,200,775 $ (1,311,000) ( (95,000) (405,000) (1,018,000) (371,775) $ (3,200,775) Show less On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $835,275 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $357,975 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $140,000 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. 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 $ Truman (762,300) Atlanta (522,000) 494,000 332,000 (56,700) 0 $ (325,000) $ (190,000) $ (853,000) $ (587,000) (325,000) (190,000) 160,000 $ (1,018,000) $ 70,000 (707,000) $ 305,525 $ 867,475 453,000 0 456,000 276,000 796,000 702,000 $ 2,425,000 $ 1,431,000 Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/21 $ (907,000) $ (404,000) (95,000) (405,000) (1,018,000) (300,000) (20,000) (707,000) Total liabilities and stockholders' equity $ (2,425,000) $ (1,431,000) 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 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.) Revenues Operating expenses Net income of subsidiary Separate company net income Consolidated net income Net income attributable to NCI Net income attributable to Truman TRUMAN COMPANY AND ATLANTA COMPANY Consolidation Worksheet For Year Ending December 31, 2021 Truman Company Atlanta Company Consolidation Entries Noncontrolling $ (762,300) $ (522,000) Debit 261,000 Credit Interest Consolidated Totals $ (1,023,300) ( 494,000 332,000 14,000 166,000 674,000 (56,700) (325,000) 0 56,700 $ (190,000) Retained earnings, 1/1/21 $ (853,000) (587,000) 587,000 Net income Dividends declared (325,000) 160,000 (190,000) 70,000 $ Retained earnings, 12/31/21 (1,018,000) $ (707,000) Current assets Investment in Atlanta Land Buildings Patent 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 $ (349,300) (24,300) 24,300 $ (325,000) (853,000) (325,000) 35,000 10,500 $ 160,000 $ 305,525 $ 453,000 867,475 456,000 0 276,000 796,000 702,000 140,000 86,250 14,000 $ 2,425,000 $ 1,431,000 $ (907,000) $ (404,000) (95,000) (405,000) (1,018,000) (300,000) (20,000) 300,000 20,000 (707,000) (34,800) $ 1,464,950 $ 215,000 (2,425,000) (1,431,000) $ 758,525 732,000 1,498,000 126,000 86,250 $ 3,200,775 $ (1,311,000) ( (95,000) (405,000) (1,018,000) (371,775) $ (3,200,775) Show less