The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.50 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $7.50 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 $46,500 and a fully amortized trademark with an estimated 10-year remaining life had a $76,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $351,500. Following are the separate financial statements for the year ending December 31, 2021: Holtz Corporation Devine, Inc. Sales $ (786,000 ) $ (379,000 ) Cost of goods sold 291,000 118,000 Operating expenses 289,000 78,000 Dividend income (16,000 ) 0 Net income $ (222,000 ) $ (183,000 ) Retained earnings, 1/1/21 $ (733,000 ) $ (421,500 ) Net income (above) (222,000 ) (183,000 ) Dividends declared 90,000 20,000 Retained earnings, 12/31/21 $ (865,000 ) $ (584,500 ) Current assets $ 311,500 $ 272,500 Investment in Devine, Inc. 600,000 0 Buildings and equipment (net) 722,500 456,000 Trademarks 156,000 212,000 Total assets $ 1,790,000 $ 940,500 Liabilities $ (605,000 ) $ (256,000 ) Common stock (320,000 ) (100,000 ) Retained earnings, 12/31/21 (above) (865,000 ) (584,500 ) Total liabilities and equities $ (1,790,000 ) $ (940,500 ) 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 $5.74 surrounding Holtz’s acquisition date, what is the impact on goodwill? Prepare a worksheet to consolidate these two companies as of December 31, 2021. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.) HOLTZ CORPORATION AND DEVINE, INC. Consolidation Worksheet For Year Ending December 31, 2021 Accounts Holtz Corporation Devine Inc. Consolidation Entries Noncontrolling Interest Consolidated Totals Debit Credit Sales $(786,000) $(379,000) $1,165,000 Cost of goods sold 291,000 118,000 409,000 Operating expenses 289,000 78,000 16,900 383,900 Dividend income (16,000) 0 16,000 Separate company net income $(222,000) $(183,000) Consolidated net income $372,100 NI attributable to noncontrolling interest 33,220 33,220 NI attributable to Holtz Corp. $338,880 Retained earnings, 1/1/21 $(733,000) $(421,500) 421,500 Net income (222,000) (183,000) 338,880 Dividends declared 90,000 20,000 90,000 Retained earnings, 12/31/21 $(865,000) $(584,500) Current assets $311,500 $272,500 Investment in Devine, Inc. 600,000 0 Buildings and equipment (net) 722,500 456,000 Trademarks 156,000 212,000 Goodwill 0 0 Total assets $1,790,000 $940,500 Liabilities $(605,000) $(256,000) Common stock (320,000) (100,000) Retained earnings, 12/31/21 (above) (865,000) (584,500) NCI in Devine, 1/1 NCI in Devine, 12/31 33,220 Total liabilities and equities $(1,790,000) $(940,500) $454,400 $0 Prepare a 2021 consolidated income statement for Holtz and Devine. (Enter all amounts as positive values.) HOLTZ CORPORATION AND DEVINE, INC. Consolidated Income Statement For Year Ending December 31, 2021 Total expenses 0 $0 To noncontrolling interest To Holtz Corporation $0

The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.50 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $7.50 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 $46,500 and a fully amortized trademark with an estimated 10-year remaining life had a $76,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $351,500. Following are the separate financial statements for the year ending December 31, 2021: Holtz Corporation Devine, Inc. Sales $ (786,000 ) $ (379,000 ) Cost of goods sold 291,000 118,000 Operating expenses 289,000 78,000 Dividend income (16,000 ) 0 Net income $ (222,000 ) $ (183,000 ) Retained earnings, 1/1/21 $ (733,000 ) $ (421,500 ) Net income (above) (222,000 ) (183,000 ) Dividends declared 90,000 20,000 Retained earnings, 12/31/21 $ (865,000 ) $ (584,500 ) Current assets $ 311,500 $ 272,500 Investment in Devine, Inc. 600,000 0 Buildings and equipment (net) 722,500 456,000 Trademarks 156,000 212,000 Total assets $ 1,790,000 $ 940,500 Liabilities $ (605,000 ) $ (256,000 ) Common stock (320,000 ) (100,000 ) Retained earnings, 12/31/21 (above) (865,000 ) (584,500 ) Total liabilities and equities $ (1,790,000 ) $ (940,500 ) 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 $5.74 surrounding Holtz’s acquisition date, what is the impact on goodwill? Prepare a worksheet to consolidate these two companies as of December 31, 2021. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.) HOLTZ CORPORATION AND DEVINE, INC. Consolidation Worksheet For Year Ending December 31, 2021 Accounts Holtz Corporation Devine Inc. Consolidation Entries Noncontrolling Interest Consolidated Totals Debit Credit Sales $(786,000) $(379,000) $1,165,000 Cost of goods sold 291,000 118,000 409,000 Operating expenses 289,000 78,000 16,900 383,900 Dividend income (16,000) 0 16,000 Separate company net income $(222,000) $(183,000) Consolidated net income $372,100 NI attributable to noncontrolling interest 33,220 33,220 NI attributable to Holtz Corp. $338,880 Retained earnings, 1/1/21 $(733,000) $(421,500) 421,500 Net income (222,000) (183,000) 338,880 Dividends declared 90,000 20,000 90,000 Retained earnings, 12/31/21 $(865,000) $(584,500) Current assets $311,500 $272,500 Investment in Devine, Inc. 600,000 0 Buildings and equipment (net) 722,500 456,000 Trademarks 156,000 212,000 Goodwill 0 0 Total assets $1,790,000 $940,500 Liabilities $(605,000) $(256,000) Common stock (320,000) (100,000) Retained earnings, 12/31/21 (above) (865,000) (584,500) NCI in Devine, 1/1 NCI in Devine, 12/31 33,220 Total liabilities and equities $(1,790,000) $(940,500) $454,400 $0 Prepare a 2021 consolidated income statement for Holtz and Devine. (Enter all amounts as positive values.) HOLTZ CORPORATION AND DEVINE, INC. Consolidated Income Statement For Year Ending December 31, 2021 Total expenses 0 $0 To noncontrolling interest To Holtz Corporation $0

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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Question

Following are the separate financial statements for the year ending December 31, 2021:

	Holtz Corporation		Devine, Inc.
Sales	$	(786,000	)	$	(379,000	)
Cost of goods sold		291,000			118,000
Operating expenses		289,000			78,000
Dividend income		(16,000	)		0
Net income	$	(222,000	)	$	(183,000	)
Retained earnings, 1/1/21	$	(733,000	)	$	(421,500	)
Net income (above)		(222,000	)		(183,000	)
Dividends declared		90,000			20,000
Retained earnings, 12/31/21	$	(865,000	)	$	(584,500	)
Current assets	$	311,500		$	272,500
Investment in Devine, Inc.		600,000			0
Buildings and equipment (net)		722,500			456,000
Trademarks		156,000			212,000
Total assets	$	1,790,000		$	940,500
Liabilities	$	(605,000	)	$	(256,000	)
Common stock		(320,000	)		(100,000	)
Retained earnings, 12/31/21 (above)		(865,000	)		(584,500	)
Total liabilities and equities	$	(1,790,000	)	$	(940,500	)

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 $5.74 surrounding Holtz’s acquisition date, what is the impact on goodwill?

Prepare a worksheet to consolidate these two companies as of December 31, 2021. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.)

HOLTZ CORPORATION AND DEVINE, INC.
Consolidation Worksheet
For Year Ending December 31, 2021
Accounts	Holtz Corporation	Devine Inc.	Consolidation Entries	Noncontrolling Interest	Consolidated Totals
Debit	Credit
Sales	$(786,000)	$(379,000)				$1,165,000
Cost of goods sold	291,000	118,000				409,000
Operating expenses	289,000	78,000	16,900			383,900
Dividend income	(16,000)	0	16,000
Separate company net income	$(222,000)	$(183,000)
Consolidated net income						$372,100
NI attributable to noncontrolling interest					33,220	33,220
NI attributable to Holtz Corp.						$338,880

Retained earnings, 1/1/21	$(733,000)	$(421,500)	421,500
Net income	(222,000)	(183,000)				338,880
Dividends declared	90,000	20,000				90,000
Retained earnings, 12/31/21	$(865,000)	$(584,500)

Current assets	$311,500	$272,500
Investment in Devine, Inc.	600,000	0
Buildings and equipment (net)	722,500	456,000
Trademarks	156,000	212,000
Goodwill	0	0
Total assets	$1,790,000	$940,500

Liabilities	$(605,000)	$(256,000)
Common stock	(320,000)	(100,000)
Retained earnings, 12/31/21 (above)	(865,000)	(584,500)
NCI in Devine, 1/1
NCI in Devine, 12/31					33,220
Total liabilities and equities	$(1,790,000)	$(940,500)	$454,400	$0

Prepare a 2021 consolidated income statement for Holtz and Devine. (Enter all amounts as positive values.)

HOLTZ CORPORATION AND DEVINE, INC.
Consolidated Income Statement
For Year Ending December 31, 2021



Total expenses		0
		$0
To noncontrolling interest
To Holtz Corporation		$0

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