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 $5.50 per share both before and after the acquisition by Holland.Zeeland's acquisition date balance sheet follows:Current assets$ 16,100 LiabilitiesProperty and equipment (net) 230,100 Connon stockPatents217,300 Retained earnings$ 463,500On January 1, 2023, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by$46,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $275,200. 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 incone.Retained earnings, 1/1Net incomeDividends declaredRetained earnings, 12/31Current assetsInvestment in ZeelandProperty and equipment (net)PatentsTotal assetsLiabilitiesCommon stock-HollandCommon stock-ZeelandRetained earnings, 12/31Total liabilities and owners' equityAccountReq A and Ba1. GoodwillReg Ca2. Goodwillallocational. Compute the amount of goodwill recognized in Holland's aa2. Show the allocation of goodwill to the controlling and nonb. Show how Holland determined its December 31, 2024, InveNote: Negative amounts should be shown with a minus sign.ControllingInterest95,280At year-end, there were no intra-entity receivables or payables.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.b. Initial Valueb. Change in Zeeland's Retained earningsb. Excess amortizationb. Investment in Zeelandc. Prepare a worksheet to determine the amounts that should appear on Holland's December 31, 2024, consolidated financialstatements.Amount98,800Noncontrollinginterest$$Holland$ (535,800)271,80067,00016,10060,400(56,568)$ (177,068)$ (822,300)(177,068)50,000$ (949,368)3,520$ 127,100576,456858,000153,200$ 1,714,756$ (445,388)(320,000)(949,368)(1,714,756)Amount620,520243,500100,000120,000463,5000420,000✔✔200,5200xZeeland$ (449,500)210,50031,90018,90057,2000$ (131,000)$ (353,200)(131,000)30,000$ (454,200)$ 102,500280,000177,500$ 560,000$ (5,800)0(100,000)(454,200)$ (560,000)

PartciularsAmountRemaining LifeAmortizationConsideration transferred by…

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.

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.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Bookkeeping

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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 $5.50 per share both before and after the acquisition by Holland.
Zeeland's acquisition date balance sheet follows:
Current assets
$ 16,100 Liabilities
Property and equipment (net) 230,100 Connon stock
Patents
217,300 Retained earnings
$ 463,500
On January 1, 2023, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by
$46,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $275,200. 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 incone.
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
Common stock-Holland
Common stock-Zeeland
Retained earnings, 12/31
Total liabilities and owners' equity
Account
Req A and B
a1. Goodwill
Reg C
a2. Goodwill
allocation
al. Compute the amount of goodwill recognized in Holland's a
a2. Show the allocation of goodwill to the controlling and non
b. Show how Holland determined its December 31, 2024, Inve
Note: Negative amounts should be shown with a minus sign.
Controlling
Interest
95,280
At year-end, there were no intra-entity receivables or payables.
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.
b. Initial Value
b. Change in Zeeland's Retained earnings
b. Excess amortization
b. Investment in Zeeland
c. Prepare a worksheet to determine the amounts that should appear on Holland's December 31, 2024, consolidated financial
statements.
Amount
98,800
Noncontrolling
interest
$
$
Holland
$ (535,800)
271,800
67,000
16,100
60,400
(56,568)
$ (177,068)
$ (822,300)
(177,068)
50,000
$ (949,368)
3,520
$ 127,100
576,456
858,000
153,200
$ 1,714,756
$ (445,388)
(320,000)
(949,368)
(1,714,756)
Amount
620,520
243,500
100,000
120,000
463,500
0
420,000✔✔
200,520
0x
Zeeland
$ (449,500)
210,500
31,900
18,900
57,200
0
$ (131,000)
$ (353,200)
(131,000)
30,000
$ (454,200)
$ 102,500
280,000
177,500
$ 560,000
$ (5,800)
0
(100,000)
(454,200)
$ (560,000)

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