On January 1, 2023, Holland Corporation paid $7 per share to a group of Zeeland Corporation shareholders to acquire 60,000 sharesof Zeeland's outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeelandcontinued to trade in the market close to its recent average of $5.00 per share both before and after the acquisition by Holland.Zeeland's acquisition date balance sheet follows:Current assetsProperty and equipment (net)PatentsOn January 1, 2023, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by$43,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $246,400. Zeeland'sacquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland'sacquisition-date fair value over its book value was attributed to goodwill.The companies' financial statements for the year ending December 31, 2024, follow:SalesCost of goods soldDepreciation expenseAmortization expenseOther operating expensesEquity in Zeeland earningsSeparate company net incomeRetained earnings, 1/1Net incomeDividends declaredRetained earnings, 12/31Current assetsInvestment in ZeelandProperty and equipment (net)PatentsTotal assetsLiabilitiesAccountCommon stock-HollandCommon stock-ZeelandRetained earnings, 12/31Total liabilities and owners' equityReq A and B$ 16,400 Liabilities210,400 Common stock221,200 Retained earnings$ 448,000At year-end, there were no intra-entity receivables or payables.a1. Goodwilla2. GoodwillallocationReq CControllingInterestHolland$ (500,700)254, 100Required:a1. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland.a2. Show the allocation of goodwill to the controlling and noncontrolling interest.b. Show how Holland determined its December 31, 2024, Investment in Zeeland account balance.c. Prepare a worksheet to determine the amounts that should appear on Holland's December 31, 2024, consolidated financialstatements.62,50016,40061,600(60,456)$ (166,556)$ (822,600)(166,556)50,000$ (939,156)$ 127,400599, 292861,000153,800$ 1,741,492$ (482,336)(320,000)126,3600(939, 156)$(1,741,492)Complete this question by entering your answers in the tabs below.b. Initial Valueb. Change in Zeeland's Retained earningsb. Excess amortizationb. Investment in Zeeland$a1. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland.a2. Show the allocation of goodwill to the controlling and noncontrolling interest.b. Show how Holland determined its December 31, 2024, Investment in Zeeland account balance.Note: Negative amounts should be shown with a minus sign.AmountX Answer is not complete.500,000$248,000100,000100,000$448,000Noncontrollinginterest84,240Zeeland$ (452,500)212,00031,60018,60056,3000Amount$ (134,000)$ (361,300)(134,000)30,000$ (465,300)$ 105,5000283,000180,500$ 569,000$ (3,700)0< Req A and B(100,000)(465,300)$ (569,000)0Req C>Show less A

On January 1, 2023, Holland Corporation paid $7 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 $5.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $16,400 Liabilities 210,400 Common stock 221,200 Retained earnings $ 448,000 $ 248,000 100,000 100,000 $ 448,000

On January 1, 2023, Holland Corporation paid $7 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 $5.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $16,400 Liabilities 210,400 Common stock 221,200 Retained earnings $ 448,000 $ 248,000 100,000 100,000 $ 448,000

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

On January 1, 2023, Holland Corporation paid $7 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 $5.00 per share both before and after the acquisition by Holland.
Zeeland's acquisition date balance sheet follows:
Current assets
Property and equipment (net)
Patents
On January 1, 2023, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by
$43,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $246,400. 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.
The companies' financial statements for the year ending December 31, 2024, follow:
Sales
Cost of goods sold
Depreciation expense
Amortization expense
Other operating expenses
Equity in Zeeland earnings
Separate company net income
Retained earnings, 1/1
Net income
Dividends declared
Retained earnings, 12/31
Current assets
Investment in Zeeland
Property and equipment (net)
Patents
Total assets
Liabilities
Account
Common stock-Holland
Common stock-Zeeland
Retained earnings, 12/31
Total liabilities and owners' equity
Req A and B
$ 16,400 Liabilities
210,400 Common stock
221,200 Retained earnings
$ 448,000
At year-end, there were no intra-entity receivables or payables.
a1. Goodwill
a2. Goodwill
allocation
Req C
Controlling
Interest
Holland
$ (500,700)
254, 100
Required:
a1. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland.
a2. Show the allocation of goodwill to the controlling and noncontrolling interest.
b. Show how Holland determined its December 31, 2024, Investment in Zeeland account balance.
c. Prepare a worksheet to determine the amounts that should appear on Holland's December 31, 2024, consolidated financial
statements.
62,500
16,400
61,600
(60,456)
$ (166,556)
$ (822,600)
(166,556)
50,000
$ (939,156)
$ 127,400
599, 292
861,000
153,800
$ 1,741,492
$ (482,336)
(320,000)
126,360
0
(939, 156)
$
(1,741,492)
Complete this question by entering your answers in the tabs below.
b. Initial Value
b. Change in Zeeland's Retained earnings
b. Excess amortization
b. Investment in Zeeland
$
a1. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland.
a2. Show the allocation of goodwill to the controlling and noncontrolling interest.
b. Show how Holland determined its December 31, 2024, Investment in Zeeland account balance.
Note: Negative amounts should be shown with a minus sign.
Amount
X Answer is not complete.
500,000
$
248,000
100,000
100,000
$
448,000
Noncontrolling
interest
84,240
Zeeland
$ (452,500)
212,000
31,600
18,600
56,300
0
Amount
$ (134,000)
$ (361,300)
(134,000)
30,000
$ (465,300)
$ 105,500
0
283,000
180,500
$ 569,000
$ (3,700)
0
< Req A and B
(100,000)
(465,300)
$ (569,000)
0
Req C
>
Show less A

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Step 2: (a1) Compute the amount of goodwill recognized in Holland’s acquisition of Zeeland:

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Step 3: (a2) Allocation of goodwill to the controlling and non-controlling interest:

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Step 4: (b) Show how Holland determined its December 31, 2024, Investment in Zeeland account balance:

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