The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Incorporated, for $6.40 per share onJanuary 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $6.40 per share before and after Holtz'sacquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine'sunderlying accounts except that a building with a 5-year future life was undervalued by $62,000 and a fully amortized trademark withan estimated 10-year remaining life had a $67,000 fair value. At the acquisition date, Devine reported common stock of $100,000 anda retained earnings balance of $260,000.Following are the separate financial statements for the year ending December 31, 2024:HoltzCorporation$ (787,000)282,000346,000(16,000)AccountsSalesCost of goods soldOperating expensesDividend incomeNet income$ (175,000)Retained earnings, 1/1/24$ (727,000)Net income (above)Dividends declaredRetained earnings, 12/31/24Current assetsInvestment in Devine, IncorporatedBuildings and equipment (net)TrademarksTotal assetsLiabilitiesCommon stockRetained earnings, 12/31/24 (above)Total liabilities and equities(175,000)50,000$ (852,000)$ 379,500512,000785,000148,000$ 1,824,500)$ (652,500)(3201000)(852,000)$ (1,824,500)At year-end, there were no intra-entity receivables or payables.Devine,Incorporated$ (392,000)105,000117,0000$ (170,000)$ (330,000)(170,000)20,000$ (480,000)$ 162,0000422,000206,000$ 790,000$ (210,000)(100,000)(480,000)$ (790,000)Required:a. Prepare a worksheet to consolidate these two companies as of December 31, 2024.b. Prepare a 2024 consolidated income statement for Holtz and Devine.c. If instead the noncontrolling interest shares of Devine had traded for $4.89 surrounding Holtz's acquisition date, what is the impacton goodwill?Complete this question by entering your answers in the tabs below.Required A Required BRequired CPrepare a 2024 consolidated income statement for Holtz and Devine.Note: Enter all amounts as positive values.HOLTZ CORPORATION AND DEVINE, INCORPORATEDConsolidated Income StatementFor Year Ending December 31, 2024Total expensesTo noncontrolling interestTo Holtz Corporation0$0$0< Required ARequired C >

Consolidation -The financial information from all companies connected to a parent firm is reflected…

Answered: The Holtz Corporation acquired 80…

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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On January 1, 2020, Pail Corporation acquired 75 percent of Sand Company's common stock for $525,000 cash. The fair value of the noncontrolling interest at that date was determined to be $175,000. At the date of the business combination, the book values of Sand's net assets and liabilities approximated fair value except for depreciable plant assets, which were OVERvalued by $4000 and Inventory, which was UNDERvalued by $9000 The remaining useful life of the plant assets was set at 10 years. For the year ended December 31, 2020, Pail reported Cost of Goods Sold of $14000 on its general ledger. Sand reported Cost of Goods Sold of $16000 on its general ledger. What amount of COST OF GOODS SOLD should be reported on the 12/31/20 consolidated Income Statement?
Parson Company acquired an 80 percent interest in Syber Company on January 1, 2020. Any portion of Syber's business fair value in excess of its corresponding book value was assigned to trademarks. This intangible asset has subsequently undergone annual amortization based on a 15-year life. Over the past two years, regular intra-entity inventory sales transpired between the two companies. No payment has yet been made on the latest transfer. All dividends are paid in the same period as declared. The individual financial statements for the two companies as well as consolidated totals for 2021 follow (credit balances indicated by parentheses): ParsonCompany SyberCompany ConsolidatedTotals Sales $ (744,000 ) $ (654,000 ) $ (1,223,000 ) Cost of goods sold 450,000 412,000 691,000 Operating expenses 104,000 107,000 213,300 Income of Syber (102,960 ) 0 0 Separate company net income $ (292,960 ) $ (135,000 )…
Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $941, 800 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,177,250. Also at the acquisition date, Stanford's book value was $546, 100. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Items Book Value Fair Value Trade names (indefinite life) $ 300, 900 $ 360, 900 Property and equipment (net, 8-year remaining life) 233, 600 262, 400 Patent (14-year remaining life) 120, 900 154, 500 For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Accounts Plaza Stanford Revenues $ (795, 100) $ (782,600) Cost of goods sold 439, 600 331, 000 Depreciation expense 186, 400 29, 200…
Vishnu
January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $7.60 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 $72,500 and a fully amortized trademark with an estimated 10-year remaining life had a $77,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $348,500. Following are the separate financial statements for the year ending December 31, 2024: Holtz Corporation $ (614,000) 216,000 251,000 (16,000) Accounts Sales Cost of goods sold Operating expenses Dividend income Net income $ (163,000) Retained earnings, 1/1/24 $ (712,000) Net income (above) Dividends declared Retained earnings, 12/31/24 Current assets Investment in Devine, Incorporated Buildings and equipment (net) Trademarks Total…
ABC Inc. purchased 35,000 voting shares out of 123 Inc.'s 50,000 outstanding voting shares for $350,000 on January 1, 2020. On the date of acquisition, 123's common shares and retained earnings were valued at $120,000 and $180,000, respectively. 123's book values approximated its fair values on the acquisition date with the exception of a patent and a trademark, neither of which had been previously recorded. The fair values of the patent and trademark on the date of acquisition were $30,000 and $20,000 respectively. On January 2, 2020, ABC sold 7,000 shares of 123 on the open market for $57,750. ABC Inc. uses the equity method to account for its investment in 123 Inc. What is the carrying value of the trademark after the sale? A. $12,600 B. $18,000 C. $20,000 D. $30,000
On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long- term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventories Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities. Common stock ($1 par) Common stock ($20 par) Additional paid-in capital Retained earnings Note: Parentheses indicate a credit balance. Multiple Choice O $1,760 In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60. Compute the amount of…
On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,120,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $830,000, retained earnings of $380,000, and a noncontrolling interest fair value of $480,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Net Income 2017 S 2018 Inventory Purchases Dividends Declared from 280,000 260,000 Corgan $ 48,000 58,000 $ 230,000 250,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 30 percent of the current year purchases remain in Smashing's inventory. 1. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018. 2. Prepare the…
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. Following are the separate financial statements for the year ending December 31, 2021: HoltzCorporation 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 $…
Milani, Incorporated, acquired 10 percent of Seida Corporation on January 1, 2023, for $192,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2024, Milani purchased an additional 30 percent of Seida for $591,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $1,970,000 in total. Seida's January 1, 2024, book value equaled $1,820,000, although land was undervalued by $139,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2024, Seida reported income of $319,000 and declared and paid dividends of $100,000. Required: Prepare the 2024 journal entries for Milani related to its investment in Seida. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet 1 2 3 4 5 Record the accrual of 40 percent of…
Rahul

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