The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.50 per share on January 1, 2020. The remaining 20 percent of Devines shares also traded actively at $7.50 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 $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, 2021:

	Holtz Corporation				Devine, Inc.
Sales	$	(786,000	)		$	(379,000	)
Cost of goods sold		291,000				118,000
Operating expenses		289,000				78,000
Dividend income		(16,000	)			0
Net income	$	(222,000	)		$	(183,000	)
Retained earnings, 1/1/21	$	(733,000	)		$	(421,500	)
Net income (above)		(222,000	)			(183,000	)
Dividends declared		90,000				20,000
Retained earnings, 12/31/21	$	(865,000	)		$	(584,500	)
Current assets	$	311,500			$	272,500
Investment in Devine, Inc.		600,000				0
Buildings and equipment (net)		722,500				456,000
Trademarks		156,000				212,000
Total assets	$	1,790,000			$	940,500
Liabilities	$	(605,000	)		$	(256,000	)
Common stock		(320,000	)			(100,000	)
Retained earnings, 12/31/21 (above)		(865,000	)			(584,500	)
Total liabilities and equities	$	(1,790,000	)		$	(940,500	)

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

1. Prepare a worksheet to consolidate these two companies as of December 31, 2021.

2. Prepare a 2021 consolidated income statement for Holtz and Devine.

3. If instead the noncontrolling interest shares of Devine had traded for $5.74 surrounding Holtzs acquisition date, what is the impact on goodwill?

For question 1:

For question 2:

Question 3:

Goodwill (increases/decreases) by _____

Accounts Noncontrolling Consolidated Interest Totals HOLTZ CORPORATION AND DEVINE, INC. Consolidation Worksheet For Year Ending December 31, 2021 Holtz Consolidation Entries Devine Inc. Corporation Debit Credit $ (786,000) $ (379,000) 291,000 118,000 289,000 78,000 (16,000) 0 $ (222,000) $ (183,000) Sales Cost of goods sold Operating expenses Dividend income Separate company net income Consolidated net income NI attributable to noncontrolling interest NI attributable to Holtz Corp. Retained earnings, 1/1/21 Net income $ (733,000) $ (421,500) (222,000) (183,000) 90,000 20,000 $ (865,000) $ (584,500) Dividends declared Retained earnings, 12/31/21 $ $ 272,500 Current assets Investment in Devine, Inc. Buildings and equipment (net) Trademarks Goodwill 311,500 600,000 722,500 0 456,000 212,000 156,000 0 Total assets $ 1,790,000 $ 940,500 Liabilities $ (605,000) $ (256,000) Common stock (320,000) (865,000) (100,000) (584,500) Retained earnings, 12/31/21 (above) NCI in Devine, 1/1 0 NCI in Devine, 12/31 Total liabilities and equities $(1,790,000) $ (940,500) $ 0 $ 0 HOLTZ CORPORATION AND DEVINE, INC. Consolidated Income Statement For Year Ending December 31, 2021 Total expenses 0 $ 0 To noncontrolling interest To Holtz Corporation $ 0