The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.30 per share on January 1, 2020. The remaining 20 percent of Devine's shares also traded actively at $7.30 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 $64,500 and a fully amortized trademark with an estimated 10-year remaining life had a $84,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $333,500. Following are the separate financial statements for the year ending December 31, 2021: Sales Cost of goods sold Operating expenses Dividend income Devine, Inc. $ (340, 250) 166,000 83,250 0 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 $ (674, 000) 233,000 275,000 (16,000) $ (182,000 $ (783,000) (182,000 70,000 $ (895,000 $ 301,600 584,000 825,000 115,000 $ 1,825,000 $ (610,000) (320,000) (895,000 $ (1,825,000) $ (91,880) $ (403,500) (91,000) 2 20,000 $ (474,500) $ 196,500 0 423,000 181,000 $ 800, 500 $ (226,000) (100,000) (474,500) $ (800, 500) 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 $5.82 surrounding Holtz's acquisition date, what is the impact on goodwill? HOLTZ CORPORATION AND DEVINE, INC. Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Accounts Holtz Corporation Devine Inc. Noncontrolling Consolidated Interest Totals Debit Credit Sales S (674,000) S (340,250) 233,000 166,000 275,000 83,250 Cost of goods sold Operating expenses Dividend income Separate company net income (16,000) 0 S (182,000) S (91,000) Consolidated net income NI attributable to noncontrolling interest NI attributable to Holtz Corp. $ (783,000) S (403,500) (182,000) (91,000) Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 70,000 20,000 S (895,000) S (474,500) Current assets $ 301,000 $ 196,500 584,000 0 Investment in Devine, Inc. Buildings and equipment (net) Trademarks 825,000 423,000 115,000 181,000 Goodwill 0 0 Total assets $ 1,825,000 S 800,500 Liabilities $ (610,000) S (226,000) Common stock (320,000) (100,000) (895,000) (474,500) Retained earnings, 12/31/21 (above) NCI in Devine, 1/1 NCI in Devine, 12/31 Total liabilities and equities S (1,825,000) S (800,500) S 0S 0 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 Total expenses 0 To noncontrolling interest To Holtz Corporation $ 0 Required A Required B Required C If instead the noncontrolling interest shares of Devine had traded for $5.82 surrounding Holtz's acquisition date, what is the impact on goodwill? Goodwill to
