Prepare a worksheet to consolidate these two companies as of December 31, 2021. Prepare a 2021 consolidated income statement for Holtz and Devine. If instead the noncontrolling interest shares of Devine had traded for $5.04 surrounding Holtz’s acquisition date, what is the impact on goodwill?
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.35 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $7.35 per share before and after Holtz’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine’s underlying accounts except that a building with a 5-year future life was undervalued by $70,000 and a fully amortized trademark with an estimated 10-year remaining life had a $70,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a
Following are the separate financial statements for the year ending December 31, 2021:
Holtz Corporation |
Devine, Inc. |
||||||
Sales | $ | (741,000 | ) | $ | (371,000 | ) | |
Cost of goods sold | 218,000 | 173,000 | |||||
Operating expenses | 292,000 | 96,000 | |||||
Dividend income | (16,000 | ) | 0 | ||||
Net income | $ | (247,000 | ) | $ | (102,000 | ) | |
Retained earnings, 1/1/21 | $ | (792,000 | ) | $ | (334,000 | ) | |
Net income (above) | (247,000 | ) | (102,000 | ) | |||
Dividends declared | 50,000 | 20,000 | |||||
Retained earnings, 12/31/21 | $ | (989,000 | ) | $ | (416,000 | ) | |
Current assets | $ | 468,000 | $ | 176,000 | |||
Investment in Devine, Inc. | 588,000 | 0 | |||||
Buildings and equipment (net) | 842,500 | 379,000 | |||||
Trademarks | 123,000 | 233,000 | |||||
Total assets | $ | 2,021,500 | $ | 788,000 | |||
Liabilities | $ | (712,500 | ) | $ | (272,000 | ) | |
Common stock | (320,000 | ) | (100,000 | ) | |||
Retained earnings, 12/31/21 (above) | (989,000 | ) | (416,000 | ) | |||
Total liabilities and equities | $ | (2,021,500 | ) | $ | (788,000 | ) | |
At year-end, there were no intra-entity receivables or payables.
-
Prepare a worksheet to consolidate these two companies as of December 31, 2021.
-
Prepare a 2021 consolidated income statement for Holtz and Devine.
-
If instead the noncontrolling interest shares of Devine had traded for $5.04 surrounding Holtz’s acquisition date, what is the impact on
goodwill ?
![HOLTZ CORPORATION AND DEVINE, INC.
Consolidation Worksheet
For Year Ending December 31, 2021
Holtz
Consolidation Entries
Noncontrolling Consolidated
Interest
Accounts
Devine Inc.
Corporation
Debit
Credit
Totals
$ (741,000) $(371,000)
173,000
96,000
Sales
Cost of goods sold
218,000
Operating expenses
292,000
Dividend income
(16,000)
Separate company net income
$ (247,000) $ (102,000)
Consolidated net income
NI attributable to noncontrolling interest
NI attributable to Holtz Corp.
$ 792,000) $ (334,000)
(102,000)
20,000
$ (989,000) $ (416,000)
Retained earnings, 1/1/21
Net income
(247,000)
Dividends declared
50,000
Retained eamings, 12/31/21](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd36cf76b-0f86-493d-ae50-e65939db2748%2F16199fd1-b1e2-4472-8663-3f896693633f%2Fmd2v19n_processed.png&w=3840&q=75)
![Retained earnings, 12/31/21
$ (989,000) $ (416,000)
Current assets
468,000 $ 176,000
Investment in Devine, Inc.
588,000
Buildings and equipment (net)
842,500
379,000
233,000
Trademarks
123,000
Goodwill
Total assets
$ 2,021,500 $ 788,000
Liabilities
$ (712,500) $ (272,000)
(100,000)
(416,000)
Common stock
(320,000)
(989,000)
Retained earnings, 12/31/21 (above)
NCI in Devine, 1/1
NCI in Devine, 12/31
Total liabilities and equities
$ (2,021,500) $ (788,000) S](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd36cf76b-0f86-493d-ae50-e65939db2748%2F16199fd1-b1e2-4472-8663-3f896693633f%2Fr92kss_processed.png&w=3840&q=75)
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