On January 1, 2020, Holland Corporation paid $9 per share to a group of Zeeland Corporation shareholders toacquire 60,000 shares of Zeeland's outstanding voting stock, representing a 60 percent ownership interest. Theremaining 40,000 shares of Zeeland continued to trade in the market close to its recent average of $8.00 per shareboth before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows:$ 216,500100,000$ 14,300328,300193,900$ 536,500Current assetsLiabilitiesProperty and equipment (net)Common stockRetained earnings220,000$ 536,500PatentsOn January 1, 2020, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to beundervalued by $58,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaininglife) worth $300,600. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to theircarrying amounts. Any remaining excess of Zeeland's acquisition-date fair value over its book value was attributedto goodwill. The companies' financial statements for the year ending December 31, 2021, follow:HollandZeeland$(675,600)342,70084,50014,30053,200$ (431,500)201,50033,70020,70062,600SalesCost of goods soldDepreciation expenseAmortization expenseOther operating expensesEquity in Zeeland earnings(42,804)( 223,704)Separate company net income2$$ (113,000)$ (304,600)(113,000)Retained earnings 1/1(820,500)(223,704)50,000( 994,204)Net income30,000$ (387,600)Dividends declaredRetained earnings 12/31125,300590,568840,000149,600Current assets$84,500Investment in ZeelandProperty and equipment (net)262,000150,500$ 497,000PatentsTotal assets$ 1,705,468(391,264)$(320,000)Liabilities(9,400)Common stock-Holland(100,000)(387,600)$(1,705,468) $ (497,000)Common stock-ZeelandRetained earnings 12/31(994,204)Total liabilities and owners equityAt year-end, there were no intra-entity receivables or payables.a. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland and the allocation of goodwill tothe controlling and noncontrolling interest.b. Show how Holland determined its December 31, 2021, Investment in Zeeland account balance.c. Prepare a worksheet to determine the amounts that should appear on Holland's December 31, 2021,consolidated financial statements.

Consolidated Financial Statements: It is the group financial statements in which the assets,…

On January 1, 2020, Holland Corporation paid $9 per share to a group of Zeeland Corporation shareholders to acquire 60,000 shares of Zeeland's outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeeland continued to trade in the market close to its recent average of $8.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: $ 216,500 100,000 220,000 $ 536,500 Current assets $14,300 328,300 193,900 $ 536,500 Liabilities Common stock Retained earnings Property and equipment (net) Patents On January 1, 2020, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $58,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $300,600. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland's acquisition-date fair value over its book value was attributed to goodwill.

On January 1, 2020, Holland Corporation paid $9 per share to a group of Zeeland Corporation shareholders to acquire 60,000 shares of Zeeland's outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeeland continued to trade in the market close to its recent average of $8.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: $ 216,500 100,000 220,000 $ 536,500 Current assets $14,300 328,300 193,900 $ 536,500 Liabilities Common stock Retained earnings Property and equipment (net) Patents On January 1, 2020, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $58,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $300,600. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland's acquisition-date fair value over its book value was attributed to goodwill.

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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