On January 1, 2017, Holland Corporation paid $8 per share to a group of Zeeland Corporation shareholders
Question:
On January 1, 2017, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $55,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $285,000. 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, 2018, follow:
At year-end, there were no intra-entity receivables or payables.
a. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland and the allocation of goodwill to the controlling and non-controlling interest.
b. Show how Holland determined its December 31, 2018, Investment in Zeeland account balance.
c. Prepare a worksheet to determine the amounts that should appear on Holland's December 31, 2018, consolidated financial statements?
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Step by Step Answer:
Advanced Accounting
ISBN: 978-1259444951
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni