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 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 0 483,000 180,000 $ 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 Holtz's 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 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.) Show less A HOLTZ CORPORATION AND DEVINE, INC. Consolidation Worksheet For Year Ending December 31, 2018 Holtz Consolidation Entries Corporation Devine Inc. Debit Credit Accounts Noncontrolling Consolidated Interest Totals $ (761,000) (396,750) Sales Cost of goods sold Operating expenses Dividend income 267,000 258,000 (16,000) $ (252,000) 124,000 114,750 0 $ (1,157,750) 391,000 390,750 0 18,000 16,000 Separate company net income (158,000) $ Consolidated net income NI attributable to noncontrolling interest NI attributable to Holtz Corp. 376,000 0 28,000 28,000 28,000 (28,000) [ 280 $ $ (744,000) (362,000) Retained earnings, 1/1 Net income Dividends declared (252,000) 80,000 (158,000) 20,000 Retained earnings, 12/31 $ (916,000) (500,000) Current assets $ 161,000 Investment in Devine Buildings and equipment (net) Trademarks $ 294,000 568,000 810,000 164,000 0 $ 1,836,000 483,000 180,000 0 $ 824,000 Goodwill Total assets Liabilities $ (600,000) (320,000)| (916,000) (224,000) (100,000) (500,000) Common stock Retained earnings, 12/31 NCI in Devine, 1/1 NCI in Devine, 12/31 (28,000) Total liabilities and equities (1,836,000) "1824,000) $ 34,000 $ 28,000
