The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.90 per share on January 1, 2017. The remaining 20 percent of Devines shares also traded actively at $6.90 per share before and after Holtzs acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devines underlying accounts except that a building with a 5-year future life was undervalued by $52,500 and a fully amortized trademark with an estimated 10-year remaining life had a $71,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $249,500.

Following are the separate financial statements for the year ending December 31, 2018:

	Holtz Corporation				Devine, Inc.
Sales	$	(837,000	)		$	(394,500	)
Cost of goods sold		292,000				154,000
Operating expenses		324,000				79,500
Dividend income		(16,000	)			0
Net income	$	(237,000	)		$	(161,000	)
Retained earnings, 1/1/18	$	(767,000	)		$	(319,500	)
Net income (above)		(237,000	)			(161,000	)
Dividends declared		80,000				20,000
Retained earnings, 12/31/18	$	(924,000	)		$	(460,500	)
Current assets	$	323,500			$	253,500
Investment in Devine, Inc		552,000				0
Buildings and equipment (net)		857,500				408,000
Trademarks		151,000				195,000
Total assets	$	1,884,000			$	856,500
Liabilities	$	(640,000	)		$	(296,000	)
Common stock		(320,000	)			(100,000	)
Retained earnings, 12/31/18 (above)		(924,000	)			(460,500	)
Total liabilities and equities	$	(1,884,000	)		$	(856,500	)

a.At year-end, there were no intra-entity receivables or payables.

b.Prepare a worksheet to consolidate these two companies as of December 31, 2018.

c.Prepare a 2018 consolidated income statement for Holtz and Devine.

If instead the noncontrolling interest shares of Devine had traded for $4.73 surrounding Holtzs acquisition date, what is the impact on goodwill?

a.Prepare a worksheet to consolidate these two companies as of December 31, 2018. (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. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.)

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HOLTZ CORPORATION AND DEVINE, INC.
Consolidation Worksheet
For Year Ending December 31, 2018
Accounts	Holtz Corporation	Devine Inc.	Consolidation Entries		Noncontrolling Interest	Consolidated Totals
			Debit	Credit
Sales	$(837,000)	$(394,500)
Cost of goods sold	292,000	154,000
Operating expenses	324,000	79,500
Dividend income	(16,000)	0
Separate company net income	$(237,000)	$(161,000)
Consolidated net income
NI attributable to noncontrolling interest
NI attributable to Holtz Corp.
Retained earnings, 1/1	$(767,000)	$(319,500)
Net income	(237,000)	(161,000)
Dividends declared	80,000	20,000
Retained earnings, 12/31	$(924,000)	$(460,500)
Current assets	$323,500	$253,500
Investment in Devine	552,000	0
Buildings and equipment (net)	857,500	408,000
Trademarks	151,000	195,000
Goodwill	0	0
Total assets	$1,884,000	$856,500
Liabilities	$(640,000)	$(296,000)
Common stock	(320,000)	(100,000)
Retained earnings, 12/31	(924,000)	(460,500)
NCI in Devine, 1/1
NCI in Devine, 12/31
Total liabilities and equities	$(1,884,000)	$(856,500)

b. Prepare a 2018 consolidated income statement for Holtz and Devine. (Enter all amounts as positive values.)

HOLTZ CORPORATION AND DEVINE, INC.
Consolidated Income Statement
For Year Ending December 31, 2018
Total expenses
To noncontrolling interest
To Holtz Corporation

If instead the noncontrolling interest shares of Devine had traded for $4.73 surrounding Holtzs acquisition date, what is the impact on goodwill?

Goodwill

to