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On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $809,550 in cash and equity securities. The remaining 30 percent of Atlantas shares traded closely near an average price that totaled $346,950 both before and after Trumans acquisition.

In reviewing its acquisition, Truman assigned a $126,000 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 subsidiarys income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.

	Truman				Atlanta
Revenues	$	(725,470	)		$	(476,000	)
Operating expenses		414,000				315,000
Income of subsidiary		(47,530	)			0
Net income	$	(359,000	)		$	(161,000	)
Retained earnings, 1/1/21	$	(916,000	)		$	(568,000	)
Net income (above)		(359,000	)			(161,000	)
Dividends declared		140,000				70,000
Retained earnings, 12/31/21	$	(1,135,000	)		$	(659,000	)
Current assets	$	515,420			$	338,000
Investment in Atlanta		832,580				0
Land		397,000				294,000
Buildings		755,000				662,000
Total assets	$	2,500,000			$	1,294,000
Liabilities	$	(865,000	)		$	(315,000	)
Common stock		(95,000	)			(300,000	)
Additional paid-in capital		(405,000	)			(20,000	)
Retained earnings, 12/31/21		(1,135,000	)			(659,000	)
Total liabilities and stockholders' equity	$	(2,500,000	)		$	(1,294,000	)

1. What is the excess fair-value assigned to patent and goodwill?

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 2021?

4. 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.

TRUMAN COMPANY AND ATLANTA COMPANY Consolidation Worksheet For Year Ending December 31, 2021 Truman Atlanta Consolidation Entries Noncontrolling Consolidated Company Company Debit Credit Interest Totals Revenues $(725,470) $(476,000) Operating expenses 414,000 315,000 Net income of subsidiary (47,530) 0 Separate company net income $(359,000) $(161,000) Consolidated net income Net income attributable to NCI Net income attributable to Truman Retained earnings, 1/1/21 $(916,000) $(568,000) Net income (359,000) (161,000) Dividends declared 140,000 70,000 Retained earnings, 12/31/21 $(1,135,000) $(659,000) Current assets $515,420 $338,000 Investment in Atlanta 832,580 0 Land 397,000 294,000 Buildings 755,000 662,000 Patent Goodwill Total assets $2,500,000 $1,294,000 Liabilities $(865,000) $(315,000) Common stock (95,000) (300,000) Additional paid in capital (405,000) (20,000) Retained earnings, 12/31/21 (1,135,000) (659,000) Noncontrolling interest 7/1 Noncontrolling interest 12/31 0 Total liabilities and stockholders equity $(2,500,000) $(1,294,000) $0 $0

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