The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.60 per share on January 1, 2020. The remaining 20 percent of Devine's shares also traded actively at $6.60 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 future life was undervalued by $68,000 and a fully amortized trademark with an estimated 10-year remaining life had a $79,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $210,000. Following are the separate financial statements for the year ending December 31, 2021: Devine, Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Retained earnings, 12/31/21 Current assets Investment in Devine, Inc. Buildings and equipment (net) Trademarks Total assets Liabilities Common stock Retained earnings, 12/31/21 (above) Total liabilities and equities Holtz Corporation $ (730,000) 238,000 313,000 (16,000) $ (195,000) $ (770,000) (195,000) 60,000 $ (905,000) $ 164,500 528,000 915,000 175,000 $ 1,782,500 $ (557,500) (320,000) (905,000) $(1,782,500) Inc. $ (481,250) 161,000 134,250 0 $ (186,000) $ (280,000) (186,000) 20,000 $ (446,000) $ 160,000 0 484,000 191,000 835,000 $ (289,000) (100,000) (446,000) $ (835,000) At year-end, there were no intra-entity receivables or payables. a. Prepare a worksheet to consolidate these two companies as of December 31, 2021. b. Prepare a 2021 consolidated income statement for Holtz and Devine. c. If instead the noncontrolling interest shares of Devine had traded for $4.57 surrounding Holtz's acquisition date, what is the impact on goodwill? 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 $ (730,000) $ (481,250) 238,000 161,000 313,000 134,250 (16,000) 0 $ (195,000) $ (186,000) 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 Dividends declared Retained earnings, 12/31/21 $ (770,000) $ (280,000) (195,000) (186,000) 60,000 20,000 $ (905,000) $ (446,000) Current assets $ 164,500 528,000 915,000 $ 160,000 0 Investment in Devine, Inc. Buildings and equipment (net) Trademarks Goodwill 175,000 484,000 191,000 0 $ 835,000 0 $ 1,782,500 Total assets Liabilities $ (557,500) $ (289,000) Common stock (320,000) (905,000) (100,000) (446,000) Retained earnings, 12/31/21 (above) NCI in Devine, 1/1 NCI in Devine, 12/31 Total liabilities and equities 0 $(1,782,500) $ (835,000) $ 0 $ 0 $ 2,617,500 Required A Required B Required C Prepare a 2021 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, 2021 Sales $ 1,211,250 Cost of goods sold 399,000 Operating expenses 447,250 X Total expenses 846,250 $ 365,000 To noncontrolling interest To Holtz Corporation $365,000
