Acquisition across the controlling and noncontrolling

Assignment Help Accounting Basics

Reference no: EM13760333

On July 1, 2011, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $720,000 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $290,000 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $100,000 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 2011. In addition, the subsidiary's income was earned uniformly throughout the year. Subsidiary dividend payments were made quarterly.

Truman	Atlanta
Revenues	$ (670,000)	$ (400,000)
Operating expenses	402,000	280,000
Income of subsidiary	(35,000)
Net income	$ (303,000)	$ (120,000)
Retained earnings, 1/1/11	$ (823,000)	$ (500,000)
Net income (above)	(303,000)	(120,000)
Dividends paid	145,000	80,000
Retained earnings, 12/31/11	$ (981,000)	$ (540,000)
Current assets	$ 481,000	$ 390,000
Investment in Atlanta	727,000
Land	388,000	200,000
Buildings	701,000	630,000
Total assets	$ 2,297,000	$ 1,220,000
Liabilities	$ (816,000)	$ (360,000)
Common stock	(95,000)	(300,000)
Additional paid-in capital	(405,000)	(20,000)
Retained earnings, 12/31/11	(981,000)	(540,000)
Total liabilities and stockholders' equity	$(2,297,000)	$(1,220,000)

Answer each of the following:

a. How did Truman allocate Atlanta's 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 2011?

d. Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2011.

Reference no: EM13760333

Questions Cloud

Prepare tulsa company income statement : Prepare Tulsa Company's income statement for 2012, beginning with ?oIncome before irregular items?

Write an essay on the profession of arms : Write an essay on THE PROFESSION OF ARMS.

Create a java class named headphones : Create a Java class named HeadPhones to represent a headphone set. The class contains- A private String data field named manufacturer that specifies the name of· A private boolean data field named pluggedIn that specifies if the headphone is plugge..

Health delivery : A high-level description of how you plan to collect the data for this project.

Acquisition across the controlling and noncontrolling : How did Truman allocate the goodwill from the acquisition across the controlling and noncontrolling interests?

Explian practices of language development of all children : identify at least three practices that support the language development of all children. Then, identify and explain three additional considerations that may require attention for children who experience more than one language.

Completed-contract method of accounting : Assuming the same facts as those above except that Hamilton uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2013?

Create a new class called soda : Create a new class called Soda that is also a caffeinated beverage by default it will have no option for condiments. Have it called in main. Main also calls the old addLemon function on Tea so that the customer gets two lemons. Use an adapter to s..

Create a implementation file containing the member function : Create a specification file containing the declaration of the VerifyDate class. Create a implementation file containing the member function definitions for VerifyDate.

User Account

All Pages