On January 1, 2020, Holland Corporation paid $7 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 $5.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $ 14,700 208,700 199, 100 $ 422,500 Liabilities Common stock Retained earnings $ 222,500 100,000 100,000 $ 422,500 On January 1, 2020, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $62,000. Holland also determined that Zeeland possessed unrecorded patents 10-year remaining life) worth $226,900. 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, 2021, follow: Sales Cost of goods sold Depreciation expense Amortization expense Other operating expenses Equity in Zeeland earnings Separate company net income Holland $ (722,400) 366,300 90,500 14,700 54,800 (49,146) $ (245, 246) Zeeland $ (435,500) 203,500 33,300 20, 300 61,400 0 $ (117,000) Retained earnings 1/1 Net income Dividends declared Retained earnings 12/31 $ (820,900) (245, 246) 50,000 $(1,016, 146) $ (315,400) (117,000) 30,000 $ (402,400) Current assets Investment in Zeeland Property and equipment (net) Patents Total assets $ 125,700 559, 332 844,000 150,400 $ 1,679,432 $ 88,500 0 266,000 154,500 $ 509,000 Llitiar 1 212 2061 16 con Current assets Investment in Zeeland Property and equipment (net) Patents Total assets $ 125,700 559, 332 844,000 150,400 $ 1,679, 432 88,500 0 266,000 154,500 $ 509,000 Liabilities Common stock-Holland Common stock-Zeeland Retained earnings 12/31 Total liabilities and owners equity $ (343,286) (320,000) 0 (1,016, 146) $(1,679,432) $ (6,600) 0 (100,000) (402,400) $ (509,000) 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, 2021, Investment in Zeeland account balance. c. Prepare a worksheet to determine the amounts that should appear on Holland's December 31, 2021, consolidated financial statements
