Question

On July 1, 2018, 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 2018. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. $ Atlanta (522,000) 332,000 Revenues Operating expenses Income of subsidiary Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Current assets Investment in Atlanta Land Buildings Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/18 Total liabilities and stockholders' equity Truman $ (762,300) 494,000 (56,700) $ (325,000) $ (853,000) (325,000) 160,000 $ (1,018,000) 305,525 867,475 456,000 796,000 $ 2,425,000 $ (907,000) (95,000) (405,000) (1,018,000) $ (2,425,000) $ (190,000) $ (587,000) (190,000) 70,000 $ (707,000) $ 453,000 0 276,000 702,000 $ 1,431,000 $ (404,000) (300,000) (20,000) (707,000) $ (1,431,000)

Answer 1

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					Consolidation		Non Controlling Interest	Consolidated Totals
d.		Truman	Atlanta	Working	Debit	Credit
Revenue		$                                              -762,300	$                                                                                   -522,000	Half Year	$   261,000			$             -1,023,300
Operating Expenses		$                                               494,000	$                                                                                     332,000	Half Year-Credit. Debit is Amortization	$      14,000	$   166,000		$                   674,000
Net Income of Subsidiary		$                                                -56,700			$      56,700			$                              -
Separate Company Net Income		$                                              -325,000	$                                                                                   -190,000					$                 -349,300
Consolidated Net Income
Net Income Attributable to NCI							$                                         -24,300	$                     24,300
Net Income Attributable to Truman								$                 -325,000
Retained Earning, 1/1		$                                              -853,000	$                                                                                   -587,000		$   587,000			$                 -853,000
Net Income (Above)		$                                              -325,000	$                                                                                   -190,000					$                 -325,000
Dividends Declared		$                                               160,000	$                                                                                       70,000	Half year-Credit, Debit is 24500/70*30		$     35,000	$                                          10,500
				From C		$     24,500		$                   160,000
Retained Earning 12/31		$                                          -1,018,000	$                                                                                   -707,000					$             -1,018,000
Current Assets		$                                               305,525	$                                                                                     453,000					$                   758,525
Investment in Atlanta		$                                               867,475		Book Value 967000*70%	$      24,500	$   676,900		$                              -
				Net Income of Subs		$     56,700
				Patent 140000*70%		$     98,000
				Goodwill Allocation		$     60,375
Land		$                                               456,000	$                                                                                     276,000					$                   732,000
Building		$                                               796,000	$                                                                                     702,000					$               1,498,000
Patent				Patent and Amortization Half Year	$   140,000	$     14,000		$                   126,000
Goodwill					$      86,250			$                     86,250
Total Assets		$                                            2,425,000	$                                                                                 1,431,000					$               3,200,775
Liabilities		$                                              -907,000	$                                                                                   -404,000					$             -1,311,000
Common Stock		$                                                -95,000	$                                                                                   -300,000		$   300,000			$                   -95,000
Additional Paid in Capital		$                                              -405,000	$                                                                                     -20,000		$      20,000			$                 -405,000
Retained Earning 12/31		$                                          -1,018,000	$                                                                                   -707,000					$             -1,018,000
Non Controlling Interest 7/1				Patent 140000*30%		$     42,000
				Goodwill Allocation		$     25,875
				Book Value 967000*30%		$   290,100	$                                      -357,975
Non Controlling Interest 12/31							$                                      -371,775	$                 -371,775
Total Liability Equity		$                                          -2,425,000	$                                                                               -1,431,000					$             -3,200,775