Problem 4-36 (LO 4-5, 4-6,4-7) The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.50 per share on January 1, 2014. The remaining 20 percent of Devine's shares also traded actively at $7.50 per share before and after Holtz's acquisition. An appraisal made on that date determined that all book values appropniately refiected the fair values of Devine's underlying accounts except that a building with a 5-year life was undervalued by $46,500 and a fully amortized trademark with an estimated 10-year remaining life had a ST6,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $351,500. Following are the separate financial statements for the year ending December 31, 2015: Devine, Inc. Holtz Sales Cost of goods sold Operating expenses Dividend income $ (786,000) $(379,000) 291,000 118,000 289,000 (16,000) 78,000 Net income $ (222,000) $(183,000) Retained earnings, 1/1115 Net income (above) $ (733,000) $(421,500) (222,000 (183,000) 90,000 20,000 Retained earnings, 12/31/15 $(865,000) $(584,500) Current assets Investment in Devine, Inc Buildings and equipment (net) Trademarks $ 311,500 $272,500 600,000 722,500 456,000 156,000 212,000 Total assets $ 1,790,000 $940,500 S (605,000) $(256,000) (320,000) (100,000) (865,0 (584,500) Common stock Retained earnings, 12/31/15 (above) Total liabilities and equities $(1,790.000) $(940,500) At year-end, there were no intra-entity receivables or payables. Answer is not complete. HOLTZ CORPORATION AND DEVINE, Consolidation Worksheet For Year Ending December 31, 2015 Consolidation Entries Noncontrolling Interest Consolidated Totals Devine Debit (786,000 (379,000) 118,000 Cost of goods sold 291,000 289,000 16,000) 222,000 Dividend income Separate company net income Consolidated net income NCI in consolidated net income Holtz's interest in consolidated net 183,000 Retained eamings, 1 Net income Dividends declared (733,000)(421,500) (222,000) 183,000) 20,000 584,500) 90,000 865,000) eamings, 12/31 Current assets Investment in Devine Buildings and equipment (net) Trademarks 11,500272 600,000 722,500 456,000 156,00021 212,000 Total assets 1,790,000 940,500 (605,000)(256,000) (320,000)(100,000) (865,000) (584,500) Common stock eamings, 12/31 NCI in Devine, 11 NCI in Devine, 12/31 Total liabilities and equities (1,790,000) (940,500) b. Prepare a 2015 consolidated income statement for Holtz and Devine. (Enter all amounts as positive values.) Answer is not complete. HOLTZ CORPORATION AND DEYINE, INC Consolidated Income Statement For Year Ending December 31, 2015 Sales S 407,000 Cost of goods sold Total expenses $ 407,000 Noncontrolling interest in CNI Controlling interest in CN $ 407,000 c. If instead the noncontrolling interest shares of Devine had traded for $5.74 surrounding Holtz's acquisition date, what is the impact on goodwill? codwill Problem 4-36 (LO 4-5, 4-6,4-7) The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.50 per share on January 1, 2014. The remaining 20 percent of Devine's shares also traded actively at $7.50 per share before and after Holtz's acquisition. An appraisal made on that date determined that all book values appropniately refiected the fair values of Devine's underlying accounts except that a building with a 5-year life was undervalued by $46,500 and a fully amortized trademark with an estimated 10-year remaining life had a ST6,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $351,500. Following are the separate financial statements for the year ending December 31, 2015: Devine, Inc. Holtz Sales Cost of goods sold Operating expenses Dividend income $ (786,000) $(379,000) 291,000 118,000 289,000 (16,000) 78,000 Net income $ (222,000) $(183,000) Retained earnings, 1/1115 Net income (above) $ (733,000) $(421,500) (222,000 (183,000) 90,000 20,000 Retained earnings, 12/31/15 $(865,000) $(584,500) Current assets Investment in Devine, Inc Buildings and equipment (net) Trademarks $ 311,500 $272,500 600,000 722,500 456,000 156,000 212,000 Total assets $ 1,790,000 $940,500 S (605,000) $(256,000) (320,000) (100,000) (865,0 (584,500) Common stock Retained earnings, 12/31/15 (above) Total liabilities and equities $(1,790.000) $(940,500) At year-end, there were no intra-entity receivables or payables. Answer is not complete. HOLTZ CORPORATION AND DEVINE, Consolidation Worksheet For Year Ending December 31, 2015 Consolidation Entries Noncontrolling Interest Consolidated Totals Devine Debit (786,000 (379,000) 118,000 Cost of goods sold 291,000 289,000 16,000) 222,000 Dividend income Separate company net income Consolidated net income NCI in consolidated net income Holtz's interest in consolidated net 183,000 Retained eamings, 1 Net income Dividends declared (733,000)(421,500) (222,000) 183,000) 20,000 584,500) 90,000 865,000) eamings, 12/31 Current assets Investment in Devine Buildings and equipment (net) Trademarks 11,500272 600,000 722,500 456,000 156,00021 212,000 Total assets 1,790,000 940,500 (605,000)(256,000) (320,000)(100,000) (865,000) (584,500) Common stock eamings, 12/31 NCI in Devine, 11 NCI in Devine, 12/31 Total liabilities and equities (1,790,000) (940,500) b. Prepare a 2015 consolidated income statement for Holtz and Devine. (Enter all amounts as positive values.) Answer is not complete. HOLTZ CORPORATION AND DEYINE, INC Consolidated Income Statement For Year Ending December 31, 2015 Sales S 407,000 Cost of goods sold Total expenses $ 407,000 Noncontrolling interest in CNI Controlling interest in CN $ 407,000 c. If instead the noncontrolling interest shares of Devine had traded for $5.74 surrounding Holtz's acquisition date, what is the impact on goodwill? codwill