On January 1, 2020, 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 15,70 329,700 212,100 557,500 Liabilities Common stock Retained earnings 237,500 1ee, eee 220,000 557,500 $ $ On January 1, 2020, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $50,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $420,100. 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 (582,600) 295,400 73,000 15,700 58,800 (44,994) (184,694) Zeeland (445,500) 288,580 32,380 19,300 58,480 $ $ (127,680) $ $ $ Retained earnings 1/1 Net income Dividends declared Retained earnings 12/31 (821,980) (184,694) 50,000 (956,594) (342,488) (127,680) 30, eee (439,400) $ $ $ 98,500 Current assets Investment in Zeeland Property and equipment (net) Patents Total assets $ 126,780 689, 228 854, eee 152,400 $ 1,742,328 276,000 168,500 543,200 $ $ $ (465,734) (320,000) (3,680) Liabilities Common stock-Holland Common stock-Zeeland Retained earnings 12/31 Total liabilities and owners equity (956,594) $ (1,742,328) (1ee, eee) (439,480) (543,200) $ At year-end, there were no intra-entity receivables or payables. interest. a. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland and the allocation of goodwill to the controlling and noncontrolling 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. Amount a1. Goodwill Controlling Interest NCI a2. Goodwill allocation Amount b. Initial Value Change in Zeeland's RE Excess amortization Investment in Zeeland $ 0 Noncontrolling Interest Consolidated Totals Accounts Sales Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Holland Zeeland Debit Credit S (582,600) S (445,500) 295,400 208,500 73,000 32,300 15,700 19,300 58,800 58,400 (44,994) 0 S (184,694) S (127,000) 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 Net income Dividends declared Retained earnings 12/31 Current assets Investment in Zeeland, Inc Property and equipment (net) Patents Goodwill S (821,900) (184,694) 50.000 S (956,594) S 126,700 609,228 854,000 152,400 0 S (342,400) (127.000) 30.000 S (439,400) S 98,500 0 278,000 168,500 0 Total assets S Liabilities S 1,742,328 (485,734) (320,000) 543,000 (3.600) (100,000) Common stock Noncontrolling interest Retained earnings 12/31 Total liabilities and equities (956,594) S (1,742,328) (439,400) S (543,000) S S
