The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.45 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $6.45 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 $65,500 and a fully amortized trademark with an estimated 10-year remaining life had a $85,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $224,500.
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.45 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $6.45 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 $65,500 and a fully amortized trademark with an estimated 10-year remaining life had a $85,000 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 | $ | (747,000 | ) | $ | (432,750 | ) | |
| Cost of goods sold | 207,000 | 135,000 | |||||
| Operating expenses | 338,000 | 126,750 | |||||
| Dividend income | (16,000 | ) | 0 | ||||
| Net income | $ | (218,000 | ) | $ | (171,000 | ) | |
| Retained earnings, 1/1/21 | $ | (725,000 | ) | $ | (294,500 | ) | |
| Net income (above) | (218,000 | ) | (171,000 | ) | |||
| Dividends declared | 50,000 | 20,000 | |||||
| Retained earnings, 12/31/21 | $ | (893,000 | ) | $ | (445,500 | ) | |
| Current assets | $ | 167,000 | $ | 184,500 | |||
| Investment in Devine, Inc. | 516,000 | 0 | |||||
| Buildings and equipment (net) | 880,000 | 363,000 | |||||
| Trademarks | 145,000 | 214,000 | |||||
| Total assets | $ | 1,708,000 | $ | 761,500 | |||
| Liabilities | $ | (495,000 | ) | $ | (216,000 | ) | |
| Common stock | (320,000 | ) | (100,000 | ) | |||
| Retained earnings, 12/31/21 (above) | (893,000 | ) | (445,500 | ) | |||
| Total liabilities and equities | $ | (1,708,000 | ) | $ | (761,500 | ) | |
At year-end, there were no intra-entity receivables or payables.
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Prepare a worksheet to consolidate these two companies as of December 31, 2021.
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