On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $776,300 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $332,700 both before and after Truman’s acquisition. In reviewing its acquisition, Truman assigned a $134,000 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. Truman Atlanta Revenues $ (681,680 ) $ (496,000 ) Operating expenses 412,000 334,000 Income of subsidiary (47,320 ) 0 Net income $ (317,000 ) $ (162,000 ) Retained earnings, 1/1/21 $ (837,000 ) $ (509,000 ) Net income (above) (317,000 ) (162,000 ) Dividends declared 150,000 50,000 Retained earnings, 12/31/21 $ (1,004,000 ) $ (621,000 ) Current assets $ 337,880 $ 342,000 Investment in Atlanta 806,120 0 Land 476,000 285,000 Buildings 716,000 656,000 Total assets $ 2,336,000 $ 1,283,000 Liabilities $ (832,000 ) $ (342,000 ) Common stock (95,000 ) (300,000 ) Additional paid-in capital (405,000 ) (20,000 ) Retained earnings, 12/31/21 (1,004,000 ) (621,000 ) Total liabilities and stockholders' equity $ (2,336,000 ) $ (1,283,000 ) 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. repare 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.) Show less 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 $(681,680) $(496,000) not attempted not attempted not attempted not attempted Operating expenses 412,000 334,000 13,400selected answer correct not attempted not attempted 759,400selected answer incorrect Net income of subsidiary (47,320) 0 47,320selected answer correct not attempted not attempted not attempted Separate company net income $(317,000) $(162,000) Consolidated net income $479,000selected answer incorrect Net income attributable to NCI not attempted 44,580selected answer incorrect Net income attributable to Truman $317,000selected answer correct Retained earnings, 1/1/21 $(837,000) $(509,000) 509,000selected answer correct not attempted not attempted 837,000selected answer correct Net income (317,000) (162,000) not attempted not attempted not attempted 317,000selected answer correct Dividends declared 150,000 50,000 not attempted 35,000selected answer incorrect 15,000selected answer incorrect 150,000selected answer correct Retained earnings, 12/31/21 $(1,004,000) $(621,000) $1,004,000selected answer correct Current assets $337,880 $342,000 not attempted not attempted not attempted $679,880selected answer correct Investment in Atlanta 806,120 0 not attempted 556,320selected answer incorrect not attempted not attempted Land 476,000 285,000 not attempted not attempted not attempted 761,000selected answer correct Buildings 716,000 656,000 not attempted not attempted not attempted 1,372,000selected answer correct Patent 134,000selected answer correct 13,400selected answer correct not attempted 120,600selected answer correct Goodwill 90,000selected answer correct not attempted not attempted 90,000selected answer correct Total assets $2,336,000 $1,283,000 not attempted Liabilities $(832,000) $(342,000) $1,174,000selected answer correct Common stock (95,000) (300,000) not attempted not attempted not attempted 95,000selected answer correct Additional paid in capital (405,000) (20,000) not attempted 224,000selected answer incorrect not attempted not attempted Retained earnings, 12/31/21 (1,004,000) (621,000) not attempted not attempted not attempted 1,004,000selected answer correct Noncontrolling interest 7/1 not attempted not attempted not attempted Noncontrolling interest 12/31 (15,000) not attempted Total liabilities and stockholders’ equity $(2,336,000) $(1,283,000) $793,720 $828,720 not attempted

On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $776,300 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $332,700 both before and after Truman’s acquisition. In reviewing its acquisition, Truman assigned a $134,000 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. Truman Atlanta Revenues $ (681,680 ) $ (496,000 ) Operating expenses 412,000 334,000 Income of subsidiary (47,320 ) 0 Net income $ (317,000 ) $ (162,000 ) Retained earnings, 1/1/21 $ (837,000 ) $ (509,000 ) Net income (above) (317,000 ) (162,000 ) Dividends declared 150,000 50,000 Retained earnings, 12/31/21 $ (1,004,000 ) $ (621,000 ) Current assets $ 337,880 $ 342,000 Investment in Atlanta 806,120 0 Land 476,000 285,000 Buildings 716,000 656,000 Total assets $ 2,336,000 $ 1,283,000 Liabilities $ (832,000 ) $ (342,000 ) Common stock (95,000 ) (300,000 ) Additional paid-in capital (405,000 ) (20,000 ) Retained earnings, 12/31/21 (1,004,000 ) (621,000 ) Total liabilities and stockholders' equity $ (2,336,000 ) $ (1,283,000 ) 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. repare 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.) Show less 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 $(681,680) $(496,000) not attempted not attempted not attempted not attempted Operating expenses 412,000 334,000 13,400selected answer correct not attempted not attempted 759,400selected answer incorrect Net income of subsidiary (47,320) 0 47,320selected answer correct not attempted not attempted not attempted Separate company net income $(317,000) $(162,000) Consolidated net income $479,000selected answer incorrect Net income attributable to NCI not attempted 44,580selected answer incorrect Net income attributable to Truman $317,000selected answer correct Retained earnings, 1/1/21 $(837,000) $(509,000) 509,000selected answer correct not attempted not attempted 837,000selected answer correct Net income (317,000) (162,000) not attempted not attempted not attempted 317,000selected answer correct Dividends declared 150,000 50,000 not attempted 35,000selected answer incorrect 15,000selected answer incorrect 150,000selected answer correct Retained earnings, 12/31/21 $(1,004,000) $(621,000) $1,004,000selected answer correct Current assets $337,880 $342,000 not attempted not attempted not attempted $679,880selected answer correct Investment in Atlanta 806,120 0 not attempted 556,320selected answer incorrect not attempted not attempted Land 476,000 285,000 not attempted not attempted not attempted 761,000selected answer correct Buildings 716,000 656,000 not attempted not attempted not attempted 1,372,000selected answer correct Patent 134,000selected answer correct 13,400selected answer correct not attempted 120,600selected answer correct Goodwill 90,000selected answer correct not attempted not attempted 90,000selected answer correct Total assets $2,336,000 $1,283,000 not attempted Liabilities $(832,000) $(342,000) $1,174,000selected answer correct Common stock (95,000) (300,000) not attempted not attempted not attempted 95,000selected answer correct Additional paid in capital (405,000) (20,000) not attempted 224,000selected answer incorrect not attempted not attempted Retained earnings, 12/31/21 (1,004,000) (621,000) not attempted not attempted not attempted 1,004,000selected answer correct Noncontrolling interest 7/1 not attempted not attempted not attempted Noncontrolling interest 12/31 (15,000) not attempted Total liabilities and stockholders’ equity $(2,336,000) $(1,283,000) $793,720 $828,720 not attempted

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

In reviewing its acquisition, Truman assigned a $134,000 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.

	Truman		Atlanta
Revenues	$	(681,680	)	$	(496,000	)
Operating expenses		412,000			334,000
Income of subsidiary		(47,320	)		0
Net income	$	(317,000	)	$	(162,000	)
Retained earnings, 1/1/21	$	(837,000	)	$	(509,000	)
Net income (above)		(317,000	)		(162,000	)
Dividends declared		150,000			50,000
Retained earnings, 12/31/21	$	(1,004,000	)	$	(621,000	)
Current assets	$	337,880		$	342,000
Investment in Atlanta		806,120			0
Land		476,000			285,000
Buildings		716,000			656,000
Total assets	$	2,336,000		$	1,283,000
Liabilities	$	(832,000	)	$	(342,000	)
Common stock		(95,000	)		(300,000	)
Additional paid-in capital		(405,000	)		(20,000	)
Retained earnings, 12/31/21		(1,004,000	)		(621,000	)
Total liabilities and stockholders' equity	$	(2,336,000	)	$	(1,283,000	)

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.

repare 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.)

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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	$(681,680)	$(496,000)	not attempted	not attempted	not attempted	not attempted
Operating expenses	412,000	334,000	13,400selected answer correct	not attempted	not attempted	759,400selected answer incorrect
Net income of subsidiary	(47,320)	0	47,320selected answer correct	not attempted	not attempted	not attempted
Separate company net income	$(317,000)	$(162,000)
Consolidated net income						$479,000selected answer incorrect
Net income attributable to NCI					not attempted	44,580selected answer incorrect
Net income attributable to Truman						$317,000selected answer correct

Retained earnings, 1/1/21	$(837,000)	$(509,000)	509,000selected answer correct	not attempted	not attempted	837,000selected answer correct
Net income	(317,000)	(162,000)	not attempted	not attempted	not attempted	317,000selected answer correct
Dividends declared	150,000	50,000	not attempted	35,000selected answer incorrect	15,000selected answer incorrect	150,000selected answer correct
Retained earnings, 12/31/21	$(1,004,000)	$(621,000)				$1,004,000selected answer correct

Current assets	$337,880	$342,000	not attempted	not attempted	not attempted	$679,880selected answer correct
Investment in Atlanta	806,120	0	not attempted	556,320selected answer incorrect	not attempted	not attempted
Land	476,000	285,000	not attempted	not attempted	not attempted	761,000selected answer correct
Buildings	716,000	656,000	not attempted	not attempted	not attempted	1,372,000selected answer correct
Patent			134,000selected answer correct	13,400selected answer correct	not attempted	120,600selected answer correct
Goodwill			90,000selected answer correct	not attempted	not attempted	90,000selected answer correct
Total assets	$2,336,000	$1,283,000				not attempted
Liabilities	$(832,000)	$(342,000)				$1,174,000selected answer correct
Common stock	(95,000)	(300,000)	not attempted	not attempted	not attempted	95,000selected answer correct
Additional paid in capital	(405,000)	(20,000)	not attempted	224,000selected answer incorrect	not attempted	not attempted
Retained earnings, 12/31/21	(1,004,000)	(621,000)	not attempted	not attempted	not attempted	1,004,000selected answer correct
Noncontrolling interest 7/1			not attempted	not attempted	not attempted
Noncontrolling interest 12/31					(15,000)	not attempted
Total liabilities and stockholders’ equity	$(2,336,000)	$(1,283,000)	$793,720	$828,720		not attempted

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