Problem 4-22 (Algo) (LO 4-3, 4-4, 4-5) On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,780,480 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $445,120. Seidel's acquisition-date total book value was $1,768,000. The fair value of Seidel's recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets- a trademark with an indefinite life and estimated fair value of $254,800 and several customer relationships estimated to be worth $187,200 with four-year remaining lives. Any remaining acquisition-date fair value in the Seidel acquisition was considered goodwill. During 2021, Seidel reported $178,880 net income and declared and paid dividends totaling $52,000. Also in 2021, Ackerman reported $364,000 net income, but neither declared nor paid dividends. a. What amount should Ackerman assign to the 20 percent noncontrolling interest of Seidel at the acquisition date? b. How much of 2021 consolidated net income should be allocated to the noncontrolling interest? c. What amount of 2021 dividends should be allocated to the noncontrolling interest? d. What amount of noncontrolling interest should appear in the owners' equity section of Ackerman's consolidated balance sheet at December 31, 2021? a Value to be assigned to noncontrolling interest (NCI) at acquisition date b Consolidated net income allocation to noncontrolling interest Dividend allocation to noncontrolling interest d. Noncontrolling interest in Seidel c. Problem 4-31 (Algo) (LO 4-3, 4-5, 4-7) On January 1, 2020, Holland Corporation paid $8 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 $6.50 per share both before and after the acquisition by Holland Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents 15,400 269,400 208, 200 $ 493,000 Liabilities Common stock Retained earnings $ 233,000 100,000 160,000 $ 493,000 On January 1, 2020, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $53,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $327,200. 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 $ (617,700) 313,100 77,500 15,400 57,600 (48,408) $ (202,508) Zeeland $ (442,500) 207,000 32,600 19,600 59,300 $ (124,000) Retained earnings 1/1 Net income Dividends declared Retained earnings 12/31 $ (821,600) (202,508) 50,000 $ (974,108) $ (334,300) (124,000) 30,000 $ (428,300) $ 95,500 Current assets Investment in Zeeland Property and equipment (net) Patents Total assets $ 126,400 588,996 851,000 151,800 $ 1,718,196 273,000 161,500 $ 530,000 $ Liabilities Common stock-Holland Common stock-Zeeland Retained earnings 12/31 $ (424,088) (320,000) (1,700) 1974. 198) (100,000) (428.90) Sales Cost of goods sold Depreciation expense Amortization expense Other operating expenses Equity in Zeeland earnings Separate company net income Holland $ (617,700) 313,100 77,500 15,400 57,600 (48,408) $ (202,508) Zeeland $ (442,500) 207,000 32,600 19,600 59,300 $ (124,000) Retained earnings 1/1 Net income Dividends declared Retained earnings 12/31 $ (821,600) (202,508) 50,000 $ (974,108) $ (334,300) (124,000) 30,000 $ (428,300) Current assets Investment in Zeeland Property and equipment (net) Patents Total assets $ 126,400 588,996 851,000 151,800 $ 1,718, 196 $ 95,500 0 273,000 161,500 $ 530,000 $ (424,088) (320,000) Liabilities Common stock-Holland Common stock-Zeeland Retained earnings 12/31 Total liabilities and owners equity $ (1,700) 0 (100,000) (428,300) $ (530,000) (974,108) $(1,718,196) 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 cont 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 financi 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. Retained earnings 12/31 Total liabilities and owners equity (974,108) $(1,718,196) (428,300 $ (530,000) 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. Complete this question by entering your answers in the tabs below. Reg A and B Reg C 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. (Negative amounts should be shown with a minus sign.) Show less Amount a 1 Goodwill Controlling Interest NCI a2 Goodwill allocation Amount b. Initial Value Change in Zeeland's RE Excess amortization Investment in Zeeland $ 0 Ivy www of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.) Show less Noncontrolling Interest Consolidated Totals Accounts Sales HOLLAND CORPORATION AND ZEELAND CORPORATION Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Holland Zeeland Debit Credit $ (617,700) $ (442,500) 313,100 207,000 77,500 32,600 15,400 19,600 57,600 59,300 (48,408) 0 $ (202,508) $ (124,000) 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 $ (821,600) $ (334,300) (202,508) (124,000) 50,000 30,000 $ (974,108) $ (428,300) $ 126,400 $ 95,500 588,996 0 851,000 273,000 151,800 161,500 0 0 Total assets Liabilities $ 1,718,196 $ (424,088) (320,000) 530,000 (1,700) (100,000) Common stock Noncontrolling interest Retained earnings 12/31 Total liabilities and equities (974,108) (428,300) $ (1,718,196) $ (530,000) $ 0 $ 0