Question

On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $763,175 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $327,075 both before and after Truman’s acquisition. In reviewing its acquisition, Truman assigned a $104,500 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 2018. In addition, the subsidiary’s income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.

	Truman				Atlanta
Revenues	$	(715,065	)		$	(470,000	)
Operating expenses		441,000				295,000
Income of subsidiary		(53,935	)			0
Net income	$	(328,000	)		$	(175,000	)
Retained earnings, 1/1/18	$	(920,000	)		$	(546,000	)
Net income (above)		(328,000	)			(175,000	)
Dividends declared		140,000				90,000
Retained earnings, 12/31/18	$	(1,108,000	)		$	(631,000	)
Current assets	$	516,390			$	466,000
Investment in Atlanta		785,610				0
Land		412,000				271,000
Buildings		752,000				652,000
Total assets	$	2,466,000			$	1,389,000
Liabilities	$	(858,000	)		$	(438,000	)
Common stock		(95,000	)			(300,000	)
Additional paid-in capital		(405,000	)			(20,000	)
Retained earnings, 12/31/18		(1,108,000	)			(631,000	)
Total liabilities and stockholders' equity	$	(2,466,000	)		$	(1,389,000	)

Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2018.

Answer 1

Part D

TRUMAN COMPANY AND SUBSIDIARY ATLANTA COMPANY

Consolidated Worksheet

For the year ending December 31, 2018

Accounts		Truman		Altanta		Consolidated entries				Non controlling interest		Consolidated totals
						Debit		Credit
Revenues	$	(715065)	$	(470000)	(S)	235000			$		$	(950065)
Operating expenses		441000		295000		10450		147500				598950
Net income to subsidiary		(53935)				53935						0
Separate company net income		(328000)		(175000)
Consolidated net income												(351115)
Net income attributable to NCI										(23115)		23115
Net income attributable to Truman												(328000)
Retained earnings 1/1		(920000)		(546000)		546000						(920000)
Net income		(328000)		(175000)								(328000)
Dividends declared		140000		90000				76500		13500		140000
Retained earnings 12/31		(1108000)		(631000)								(1108000)
Current assets		516390		466000								982390
Investment in Atlanta		785610		0		31500		817110				0
Land		412000		271000								683000
buildings		752000		652000								1404000
Patent						104500		10450				94050
goodwill						77250						77250
Total assets		2468000		1309000								3240690
Liabilities		(858000)		(438000)								(1296000)
Common stock		(95000)		(300000)		300000						(95000)
Additional paid in capital		(405000)		(20000)		20000						(405000)
Retained earnings 12/31		(1108000)		(631000)								(1108000)
Noncontrolling interest 7/1								327075		(327075)
Noncontrolling interest 12/31										(336690)		(336690)
Total liabilities and equity		(2466000)		(1389000)		1378635		1378635				(3240690)