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, 2018.
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Prepare a 2018 consolidated income statement for Holtz and Devine.
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.90 per share on January 1, 2017. The remaining 20 percent of Devine's shares also traded actively at $6.90 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 $52,500 and a fully amortized trademark with an estimated 10-year remaining life had a $71,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $249,500. Following are the separate financial statements for the year ending December 31, 2018: Devine, Inc. $ (394,500) 154,000 79,500 Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Current assets Investment in Devine, Inc Buildings and equipment (net) Trademarks Total assets Liabilities Common stock Retained earnings, 12/31/18 (above) Total liabilities and equities Holtz Corporation $ (837,000) 292,000 324,000 (16,000) $ (237,000) $ (767,000) (237,000) 80,000 $ (924,000) 323,500 552,000 857,500 151,000 $ 1,884,000 $ (640,000) (320,000) (924,000) $(1,884,000) $ (161,000) $ (319,500) (161,000) 20,000 $ (460,500) $ 253,500 0 408,000 195,000 $ 856,500 $ (296,000) (100,000) (460,500) $ (856,500) Consolidated Accounts Noncontrolling Interest Sales Cost of goods sold Operating expenses Dividend income HOLTZ CORPORATION AND DEVINE, INC. Consolidation Worksheet For Year Ending December 31, 2018 Holtz Devine Consolidation Entries Corporation Inc. Debit Credit $ (837,000) (394,500) 292,000 154,000 324,000 79,500 17,600 (16,000) 16,000 $ (237,000) $ (237,000) (161.000) $ (1,231,500) 446,000 421,100 0 Separate company net income $ (364,400) Consolidated net income NI attributable to noncontrolling interest NI attributable to Holtz Corp. $ (364,400) Retained earnings, 1/1 319,500 Net income Dividends declared $ (767,000) (237,000) 80,000 1319.500) (161,000) 20,000 16,000 4,000 80,000 80,000 Retained earnings, 12/31 $ (924,000) (460,500) $ 253,500 Current assets Investment in Devine Buildings and equipment (net) Trademarks Goodwill Total assets $ 323,500 552,000 857,500 151,000 0 $ 1,884,000 408,000 195,000 0 $ 856,500 42,000 63,900 217,000 10,500 7,100 577,000 0 1,297,000 402,800 217,000 2,493,800 $ $ $ (640,000) (320,000) (924,000) (296,000) (100,000) (460,500) 100,000 (936,000) (320,000) (1,101,320) Liabilities Common stock Retained earnings, 12/31 NCI in Devine, 1/1 NCI in Devine, 12/31 Total liabilities and equities 4.000 $ (1,884,000) 1 (856,500) $776,000 $ 33,600 $ (2,357,320)
