Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 04 Aug 2017 My Price 12.00

Truman Company

On July 1, 2015, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $767,200 in cash and equity securities. The remaining 30 percent of AtlantaAc€?cs shares traded closely near an average price that totaled $328,800 both before and after TrumanAc€?cs acquisition.

      In reviewing its acquisition, Truman assigned a $138,500 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 2015. In addition, the subsidiaryAc€?cs income was earned uniformly throughout the year. Subsidiary dividend payments were made quarterly.

  

  Truman        Atlanta   
  Revenues $ (761,695 ) $ (497,000 )
  Operating expenses   489,000     357,000  
  Income of subsidiary   (39,305 )      
                 
     Net income $ (312,000 ) $ (140,000 )
              
  Retained earnings, 1/1/15 $ (883,000 ) $ (516,000 )
  Net income (above)   (312,000 )   (140,000 )
  Dividends declared   140,000     70,000  
             
     Retained earnings, 12/31/15 $ (1,055,000 ) $ (586,000 )
              
  Current assets $ 484,995   $ 433,000  
  Investment in Atlanta   782,005        
  Land   431,000     233,000  
  Buildings   749,000     659,000  
              
     Total assets $ 2,447,000   $ 1,325,000  
             
  Liabilities $ (892,000 ) $ (419,000 )
  Common stock   (95,000 )   (300,000 )
  Additional paid-in capital   (405,000 )   (20,000 )
  Retained earnings, 12/31/15   (1,055,000 )   (586,000 )
             
     Total liabilities and stockholders' equity $ (2,447,000 ) $ (1,325,000 )
             
 
a.

How did Truman allocate AtlantaAc€?cs acquisition-date fair value to the various assets acquired and liabilities assumed in the combination?
   
   
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 2015?
   
   
d.

Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2015. (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.)

 

Answers

Maurice Tutor
(5)
Status NEW Posted 04 Aug 2017 08:08 PM My Price 12.00

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