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On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $778,190 in cash and equity securities

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On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $778,190 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $333,510 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $146,500 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 2021. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. $ Atlanta (501,000) 341,000 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 Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and stockholders' equity Truman $ (781,255) 488,000 (45,745) $ (339,000) $ (890,000) (339,000) 145,000 $(1,084,000) $ 428,065 795,935 455,000 779,000 $ 2,458,000 $ (874,000) (95,000) (405,000) (1,084, 000) $ (2,458,000) $ (160,000) $ (523,000) (160,000) 80,000 $ (603,000) $ 398,000 3 224,000 673,000 $ 1,295,000 $ (372,000) (300,000) (20,000) (603,000) $(1,295,000) 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. Consolidated TRUMAN COMPANY AND ATLANTA COMPANY Consolidation Worksheet For Year Ending December 31, 2021 Truman Atlanta Consolidation Entries Company Company Debit Credit $ (781,255) $ (501,000) $ 250,500 488,000 341,000 14,650 170,500 (45,745) 0 45,745 $ (339,000) $ (160,000) Noncontrolling Interest Totals $ 1,031,755 673,150 0 Revenues Operating expenses Net income of subsidiary Separate company net income Consolidated net income Net income attributable to NCI Net income attributable to Truman $ 19,605 358,605 19,605 339,000 $ 523,000 0 Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 $ (890,000) (339,000) 145,000 $ (1,084,000) $ (523,000) (160,000) 80,000 $ (603,000) 68,000 890,000 0 145,000 $ 1,084,000 12,000 $ $ $ 826,065 28,000 0 428,065 795,935 455,000 779,000 398,000 0 224,000 673,000 0 14,650 146,500 82,200 $ 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 $ 2,458,000 $ (874,000) (95,000) (405,000) (1,084,000) $ 679,000 1,452,000 131,850 82,200 3,171,115 1,246,000 95,000 405,000 1,084,000 $ 1,295,000 $ (372.000) (300,000) (20,000) (603,000) 300,000 20,000 0 % 0 333,510 341,115 $ (2,458,000) $ (1,295,000) 341,115 3,171,115 $ 1,410,595 $ 253,150 $