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 appropriately reflected 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 $76,000 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: Holtz Devine, Sales Cost of goods sold Operating expenses Dividend income $ (786,000) $(379,000) 118,000 78,000 291,000 289,000 (16,000) Net income $ (222,000) $(183,000) Retained earnings, 1/1/15 Net income (above) Dividends declared $ (733,000) $(421,500) (222,000) 183,000) 20,000 90,000 Retained earnings, 12/31/15 $ (865,000) $(584,500) $ 311,500 $ 272,500 Current assets Investment in Devine, Inc Buildings and equipment (net) 600,000 722,500 456,000 156,000 212,000 Trademarks Total assets $ 1,790,000 $ 940,500 Liabilities Common stock Retained earnings, 12/31/15 (above) $ (605,000) $(256,000) (320,000) (100,000) (865,000) (584,500) Total liabilities and equities $(1,790,000) $(940,500) At year-end, there were no intra-entity receivables or payables. Prepare a worksheet to consolidate these two companies as of December 31, 2015. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) a. LTZ CORPORATION AND DEVINE Consolidation Worksheet For Year Ending December 31, 2015 Consolidation Entries Noncontrolling Consolidated Interest Totals Holtz Accounts Devine Inc.Debit Credit Sales Cost of goods sold Operating expenses Dividend income Separate company net income Consolidated net income NCI in consolidated net income Holtz's interest in consolidated net income (786,000) (379,000) 118,000 7B,000 291.000 289,000 16,000) (222,000) (183,000) Retained earnings, 1/1 Net income Dividends declared (733,000)(421,500) (222,000) (183,000) 20,000 (B65,000) (584,500) 90.000 Retained earnings, 12/31 Current assets Investment in Devine Buildings and equipment (net) Trademarks Goodwil 311,500 272,500 600,000 722,500 456,000 156,000212,000 Total assets 1790,000940.500 Liabilities Common stock Retained earnings, 1231 NCI in Devine, 1/1 (605,000) (256,000) (320,000) 100,000) (865,000)(584,500) 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.) HOLTZ CORPORATION AND DEVINE, INC Consolidated Income Statemsnt For Year Ending December 31, 2015 Sales S407,000 Cost of goods sold Total expenses S 407,000 Noncontrolling interest in CNI Controlling interest in CNI S407,000 c. If instead the noncontrolling interest shares of Devine had tradedfor $5.74 surrounding Holtz's acquisition date, what is the impact on goodwill? od 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 appropriately reflected 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 $76,000 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: Holtz Devine, Sales Cost of goods sold Operating expenses Dividend income $ (786,000) $(379,000) 118,000 78,000 291,000 289,000 (16,000) Net income $ (222,000) $(183,000) Retained earnings, 1/1/15 Net income (above) Dividends declared $ (733,000) $(421,500) (222,000) 183,000) 20,000 90,000 Retained earnings, 12/31/15 $ (865,000) $(584,500) $ 311,500 $ 272,500 Current assets Investment in Devine, Inc Buildings and equipment (net) 600,000 722,500 456,000 156,000 212,000 Trademarks Total assets $ 1,790,000 $ 940,500 Liabilities Common stock Retained earnings, 12/31/15 (above) $ (605,000) $(256,000) (320,000) (100,000) (865,000) (584,500) Total liabilities and equities $(1,790,000) $(940,500) At year-end, there were no intra-entity receivables or payables. Prepare a worksheet to consolidate these two companies as of December 31, 2015. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) a. LTZ CORPORATION AND DEVINE Consolidation Worksheet For Year Ending December 31, 2015 Consolidation Entries Noncontrolling Consolidated Interest Totals Holtz Accounts Devine Inc.Debit Credit Sales Cost of goods sold Operating expenses Dividend income Separate company net income Consolidated net income NCI in consolidated net income Holtz's interest in consolidated net income (786,000) (379,000) 118,000 7B,000 291.000 289,000 16,000) (222,000) (183,000) Retained earnings, 1/1 Net income Dividends declared (733,000)(421,500) (222,000) (183,000) 20,000 (B65,000) (584,500) 90.000 Retained earnings, 12/31 Current assets Investment in Devine Buildings and equipment (net) Trademarks Goodwil 311,500 272,500 600,000 722,500 456,000 156,000212,000 Total assets 1790,000940.500 Liabilities Common stock Retained earnings, 1231 NCI in Devine, 1/1 (605,000) (256,000) (320,000) 100,000) (865,000)(584,500) 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.) HOLTZ CORPORATION AND DEVINE, INC Consolidated Income Statemsnt For Year Ending December 31, 2015 Sales S407,000 Cost of goods sold Total expenses S 407,000 Noncontrolling interest in CNI Controlling interest in CNI S407,000 c. If instead the noncontrolling interest shares of Devine had tradedfor $5.74 surrounding Holtz's acquisition date, what is the impact on goodwill? od