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 $ 15,600 329,600 210,800 $ 556,000 Liabilities Common stock Retained earnings $ 236,000 100,000 - 220,000 $ 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: 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 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. 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. Amount a1. Goodwill Controlling Interest NCI a2. Goodwill allocation Amount b. Investment in Zeeland 12/31/18 Reg A and B Reqc > Noncontrolling Interest Consolidated Totals Accounts HOLLAND CORPORATION AND ZEELAND CORPORATION Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Holland Zeeland Debit Credit $ (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) 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 of Retained earnings, 12/31 $ (821,800) $ (339,700) (188,786) (126,000) 50,000 30,000 $ (960,586) $ (435,700) $ 126,600 $ 97,500 606,792 853,000 275,000 152,200 167,500 Current assets Investment in Zeeland, Inc Property and equipment (net) Patents $ Goodwill Total assets Liabilities Common stock Noncontrolling interest Retained earnings, 12/31 $ 1,738,592 (458,006) (320,000) 540,000 (4,300) (100,000) (960,586) (435,700) (1,738,592) $ (540,000) Total liabilities and equities Req A and B RegC) 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 $ 15,600 329,600 210,800 $ 556,000 Liabilities Common stock Retained earnings $ 236,000 100,000 - 220,000 $ 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: 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 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. 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. Amount a1. Goodwill Controlling Interest NCI a2. Goodwill allocation Amount b. Investment in Zeeland 12/31/18 Reg A and B Reqc > Noncontrolling Interest Consolidated Totals Accounts HOLLAND CORPORATION AND ZEELAND CORPORATION Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Holland Zeeland Debit Credit $ (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) 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 of Retained earnings, 12/31 $ (821,800) $ (339,700) (188,786) (126,000) 50,000 30,000 $ (960,586) $ (435,700) $ 126,600 $ 97,500 606,792 853,000 275,000 152,200 167,500 Current assets Investment in Zeeland, Inc Property and equipment (net) Patents $ Goodwill Total assets Liabilities Common stock Noncontrolling interest Retained earnings, 12/31 $ 1,738,592 (458,006) (320,000) 540,000 (4,300) (100,000) (960,586) (435,700) (1,738,592) $ (540,000) Total liabilities and equities Req A and B RegC)