The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.20 pershare on January 1, 2020. The remaining 20 percent of Devine's shares also traded actively at $7.20 per sharebefore and after Holtz's acquisition. An appraisal made on that date determined that all book values appropriatelyreflected the fair values of Devine's underlying accounts except that a building with a five-year future life wasundervalued by $85,500 and a fully amortized trademark with an estimated 10-year remaining life had a $64,000fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of$226,500.Following are the separate financial statements for the year ending December 31, 2021:HoltzDevine,Corporation$Inc.(641,000)198,000273,000$ (399,000)176,000126,000SalesCost of goods soldOperating expenses(16,000)( 186,000)Dividend income$ (97,000)$ (296,500)(97,000)20,000$ (373,500)Net income2$Retained earnings, 1/1/21Net income (above)$ (762,000)(186,000)Dividends declared70,000Retained earnings, 12/31/212$(878,000)121,000576,000887,000Current assets$$ 120,500Investment in Devine, Inc.Buildings and equipment (net)335,000236,000$ 691,500Trademarks149,000$ 1,733,000Total assets$(535,000)(320,000)(878,000)$ (218,000)(100,000)(373,500)$ (691,500)LiabilitiesCommon stockRetained earnings, 12/31/21 (above)Total liabilities and equities$(1,733,000)At year-end, there were no intra-entity receivables or payables.a. Prepare a worksheet to consolidate these two companies as of December 31, 2021.b. Prepare a 2021 consolidated income statement for Holtz and Devine.c. If instead the noncontrolling interest shares of Devine had traded for $4.76 surrounding Holtz's acquisition date,what is the impact on goodwill?

Given, Outstanding voting rights is 100,000 Acquired 80% NCI traded price is $4.76 Remaining 20%…

The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.20 p share on January 1, 2020. The remaining 20 percent of Devine's shares also traded actively at $7.20 per share before and after Holtz's acquisition. An appraisal made on that date determined that all book values appropriate reflected the fair values of Devine's underlying accounts except that a building with a five-year future life was undervalued by $85,500 and a fully amortized trademark with an estimated 10-year remaining life had a $64,00 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance $226,500. Following are the separate financial statements for the year ending December 31, 2021: Holtz Devine, Corporation $(641,000) 198 000 Inc. Sales $ (399,000) Cost of goods sold 176 000

The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.20 p share on January 1, 2020. The remaining 20 percent of Devine's shares also traded actively at $7.20 per share before and after Holtz's acquisition. An appraisal made on that date determined that all book values appropriate reflected the fair values of Devine's underlying accounts except that a building with a five-year future life was undervalued by $85,500 and a fully amortized trademark with an estimated 10-year remaining life had a $64,00 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance $226,500. Following are the separate financial statements for the year ending December 31, 2021: Holtz Devine, Corporation $(641,000) 198 000 Inc. Sales $ (399,000) Cost of goods sold 176 000

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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