The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.10 per share on January 1, 2017. The remaining 20 percent of Devine's shares also traded actively at $7.10 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 $50,000 and a fully amortized trademark with an estimated 10-year remaining life had a $80,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $292,000. Following are the separate financial statements for the year ending December 31, 2018: Devine, Inc. $ (396,750) 124,000 114,750 0 119 Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Current assets Investment in Devine, Inc Buildings and equipment (net) Trademarks Total assets Liabilities Common stock Retained earnings, 12/31/18 (above) Total liabilities and equities Holtz Corporation $ (761,000) 267,000 258,000 (16,000) $ (252,000) $ (744,000) (252,000) 80,000 $ (916,000) 294,000 568,000 810,000 164,000 $ 1,836,000 $ (600,000) (320,000) (916,000) $(1,836,000) $ (158,000) $ (362,000) (158,000) 20,000 $ (500,000) $ 161,000 483,000 180,000 $ 824,000 $ (224,000) (100,000) (500,000) $ (824,000) At year-end, there were no intra-entity receivables or payables. a. Prepare a worksheet to consolidate these two companies as of December 31, 2018. b. Prepare a 2018 consolidated income statement for Holtz and Devine. C. If instead the noncontrolling interest shares of Devine had traded for $5.22 surrounding Holtzs acquisition date, what is the impact on goodwill? Complete this question by entering your answers in the tabs below. Required A Required B Required C ...... 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 Sales $ 1,157,750 Cost of goods sold 391,000 Operating expenses 390,750 Total expenses 781,750 Consolidated net income $ 376,000 To noncontrolling interest $ (28,000) To Holtz Corporation $ 404,000 The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.10 per share on January 1, 2017. The remaining 20 percent of Devine's shares also traded actively at $7.10 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 $50,000 and a fully amortized trademark with an estimated 10-year remaining life had a $80,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $292,000. Following are the separate financial statements for the year ending December 31, 2018: Devine, Inc. $ (396,750) 124,000 114,750 0 119 Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Current assets Investment in Devine, Inc Buildings and equipment (net) Trademarks Total assets Liabilities Common stock Retained earnings, 12/31/18 (above) Total liabilities and equities Holtz Corporation $ (761,000) 267,000 258,000 (16,000) $ (252,000) $ (744,000) (252,000) 80,000 $ (916,000) 294,000 568,000 810,000 164,000 $ 1,836,000 $ (600,000) (320,000) (916,000) $(1,836,000) $ (158,000) $ (362,000) (158,000) 20,000 $ (500,000) $ 161,000 483,000 180,000 $ 824,000 $ (224,000) (100,000) (500,000) $ (824,000) At year-end, there were no intra-entity receivables or payables. a. Prepare a worksheet to consolidate these two companies as of December 31, 2018. b. Prepare a 2018 consolidated income statement for Holtz and Devine. C. If instead the noncontrolling interest shares of Devine had traded for $5.22 surrounding Holtzs acquisition date, what is the impact on goodwill? Complete this question by entering your answers in the tabs below. Required A Required B Required C ...... 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 Sales $ 1,157,750 Cost of goods sold 391,000 Operating expenses 390,750 Total expenses 781,750 Consolidated net income $ 376,000 To noncontrolling interest $ (28,000) To Holtz Corporation $ 404,000
