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 Devines shares also traded actively at $6.60 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 $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:

REQUIRED:

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 $4.57 surrounding Holtzs acquisition date, what is the impact on goodwill?

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) Devine, 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) HOLTZ CORPORATION AND DEVINE, INC. Consolidation Worksheet For Year Ending December 31, 2021 Holtz Consolidation Entries Devine Inc. Corporation Debit Credit Accounts Noncontrolling Consolidated Interest Totals 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. $ (730,000) $ (481,250) 238,000 161,000 313,000 134,250 (16,000) $ (195,000) $ (186,000) Retained earnings, 1/1/21 Net income $ (770,000) $ (280,000) (195,000) (186,000) 60,000 20,000 $ (905,000) $ (446,000) Dividends declared Retained earnings, 12/31/21 Current assets $ Investment in Devine, Inc. Buildings and equipment (net) 164,500 $ 160,000 528,000 0 915,000 484,000 175,000 191,000 Trademarks Goodwill 0 0 Total assets $ 1,782,500 $ 835,000 Liabilities Common stock $ (557,500) $ (289,000) (320,000) (100,000) (905,000) (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 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 Goodwill to