Short Answer #4 (14 points)- (Problem continues on next page) 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 $7.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Patents $234,500 100,000 Property and equipment (net) 289,500 Common stock 209,500 Retained earnings 180,000 $514,500 $514,500 $ 15,500 Liabilities On January 1, 2020, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $52,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $360,000. 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: Zeeland Holland $ (606,000) $(443,500) Sales Cost of goods sold Depreciation expense Amortization expense Other operating expenses Equity in Zeeland earnings Separate company net income Retained earnings 1/1 Net income Dividends declared Retained earnings 12/31 Current assets Investment in Zeeland Property and equipment (net) Patents Total assets Liabilities Common stock-Holland Common stock-Zeeland Retained earnings 12/31 Total liabilities and owners equity 307,200 207,500 76,000 32,500 15,500 19,500 59,000 0 58,000 (47,160) $ (196,460) $(125,000) S (821,700) $(337,000) (196,460) (125,000) 50,000 30,000 $ (968,160) $(432,000) $ 126,500 $ 96,500 575,520 0 852,000 274,000 152,000 166,500 $ 1,706,020 $ 537,000 $ (417,860) S (5,000) (320,000) 0 0 (100,000) (968,160) (432,000) $(1,706,020) $(537,000)