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On January 1, 2017, Holland Corporation paid $9 per share to a group of Zeeland Corporation shareholders to acquire 60.000 shares of Zeeland's outstanding voting
On January 1, 2017, Holland Corporation paid $9 per share to a group of Zeeland Corporation shareholders to acquire 60.000 shares of Zeeland's outstanding voting stock, representing a 60 percent ownership interest. The remaining 40.000 shares of Zeeland continued to trade in the market close to its recent average of $8.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $ 15, 600 329, 600 Li abilities Common stock $236,000 100,000 210, 800 Retained 220,000 Learnings $556, 000 $556, 000 On January 1. 2017, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $51,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $419.900. 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: Sales $ Cost of goods sold Depreciation expense Amortization expense Other operating expenses Equity in Zeeland earnings Separate company net income Holland (594, 300) 301, 300 74,500 15,600 58, 400 (44, 286) (188, 786) Zeeland $(444, 500) 208,000 32,400 19,400 58, 700 $ $(126, 000) $ Retained earnings 1/1 Net income Dividends declared Retained earnings 12/31 (821, 800) (188, 786) 50,000 (960, 586) $(339, 700) (126, 000) 30,000 $(435, 700) $ $ 97,500 0 Current assets Investment in Zeeland Property and equipment (net) Patents Total assets $ 126,600 606, 792 853, 000 152, 200 $ 1,738, 592 275,000 167,500 $ 540,000 $ (4,300) Liabilities Common stock - Holland Common stock - Zeeland Retained earnings 12/31 Total liabilities and owners equity $ (458, 006) (320,000) 0 (960, 586) $(1, 738, 592) (100, 000) (435, 700) $(540, 000) At year-end, there were no intra-entity receivables or payables. o. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland and the allocation of goodwill to the controlling and noncontrolling 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. Complete this question by entering your answers in the tabs below. Req A and B Reqc a. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland and the allocation of goodwill to the controlling and noncontrolling interest. b. Show how Holland determined its December 31, 2018, Investment in Zeeland account balance. Show less Amount a1. Goodwill Controlling Interest NCI a2. Goodwill allocation Amount b. Investment in Zeeland 12/31/18 sh HOLLAND CORPORATION AND ZEELAND CORPORATION Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries NoncontrollingConsolidated Holland Zeeland Debit Credit Interest Totals $ (594,300) $ (444,500) 301,300 208,000 74,500 32,400 15,600 19,400 58,400 58,700 (44,286) $ (188,786) $ (126,000) $ Accounts Sales Cost of goods sold Depreciation expense Amortization expense Other operating expenses Equity in Zeeland earnings Separate company net income Consolidated net income Noncontrolling interest in CNI Controlling interest net income Retained earnings, 1/1/18 Net income Dividends declared Retained earnings, 12/31 Current assets Investment in Zeeland, Inc Property and equipment (net) Patents Goodwill Total assets Liabilities Common stock Noncontrolling interest Retained earnings, 12/31 $ (821,800) (188,786) 50,000 $ (960,586) $ 126,600 606,792 853,000 152,200 $ $ (339,700) (126,000) 30,000 (435,700) 97,500 0 275,000 167,500 0 540,000 (4,300) (100,000) $ $ 1,738,592 (458,006) (320,000) (960,586) (435,700) 1,738,592) $ (540,000) Total liabilities and equities
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