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On January 1, 2017, Holland Corporation paid $8 per share to a group of Zeeland Corporation shareholders to acquire 60,000 shares of Zeeland's outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeeland continued to trade in the market close to its recent average of $6.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets $ 14, 500 Liabilities $ 219, 500 Property and equipment (net) 248, 500 Common stock 100, 000 Patents 196, 500 Retained earnings 140, 000 $ 459, 500 $ 459, 500 On January 1, 2017, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $60,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $290,600. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland's acquisition-date fair value over its book value was attributed to goodwill. The companies' financial statements for the year ending December 31, 2018, follow: Holland Zeeland Sales $ (699, 000) (433, 500) Cost of goods sold 354, 500 202, 500 Depreciation expense 87, 500 33, 500 Amortization expense 14, 500 20, 500 Other operating expenses 54, 000 62, 000 Equity in Zeeland earnings (44, 364) Separate company net income $ (232, 864) (115, 000) Retained earnings 1/1 $ (820, 700) $ (310, 000) Net income 232, 864) (115, 000) Dividends declared 50, 000 30, 000 Retained earnings 12/31 $ (1, 003, 564) $ (395, 000) Current assets $ 125, 500 86, 500 Investment in Zeeland 683, 728 Property and equipment (net) 842, 000 264, 000 Patents 150, 000 152, 500 Total assets $ 1, 701, 228 $ 503, 000 Liabilities $ (377, 664) (8, 000) Common stock - Holland (320, 000) Common stock - Zeeland (100, 000) Retained earnings 12/31 (1, 003, 564) (395, 000) Total liabilities and owners equity $ (1, 701, 228) $ (503, 000) At year-end, there were no intra-entity receivables or payables.Show less HOLLAND CORPORATION AND ZEELAND CORPORATION Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Noncontrolling Consolidated Accounts Holland Zeeland Debit Credit Interest Totals Sales $ (699,000) $ (433,500) $ (1,132,500) Cost of goods sold 354,500 202,500 657,000 Depreciation expense 87,500 33,500 12,000 133,000 Amortization expense 14,500 20,500 29,060 64,060 Other operating expenses 54,000 62,000 116,000 Equity in Zeeland earnings (44,364) 0 44,364 Separate company net income $ (232,864) $ (115,000 Consolidated net income $ (262,440) Noncontrolling interest in CNI (29,576) 29,576 Controlling interest net income 232,864) Retained earnings, 1/1/18 $ (820,700) $ (310,000) 310,000 (820,700) Net income (232,864 (115,000) (232,864) Dividends declared 50.000 30.000 18,000 12,000 50,000 Retained earnings, 12/31 (1,003,564) $ (395,000) $ (1,003,564) Current assets $ 125,500 86.500 553,728 x 212,000 Investment in Zeeland, Inc 583,728 0 18,000 Property and equipment (net) 842,000 264,000 48,000 12,000 1,142,000 Patents 150,000 152,500 261,540 29,060 534,980 Goodwill 0 0 129,400 129,400 Total assets $ 1,701,228 $ 503,000 $ 2,018,380 Liabilities (377,664) (8,000) (385,664) Common stock 320,000) (100,000) 100,000 (320,000) Noncontrolling interest 339,576 X 339,576) X Retained earnings, 12/31 (1,003,564) 395,000 (1,003,564) Total liabilities and equities $ (1,701,228) $ (503,000) $ 952,364 $ 952,364 $ (1,709,228) Total liabilities and owners equity $ (1, 701, 228) (503, 000) At year-end, there were no intra-entity receivables or payables. a. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland and the allocation of goodwill to the controlling and noncontrolling interest. b. Show how Holland determined its December 31, 2018, Investment in Zeeland account balance. c. Prepare a worksheet to determine the amounts that should appear on Holland's December 31, 2018, consolidated financial statements. X Answer is not complete. Complete this question by entering your answers in the tabs below. Req A and B Req C a. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland and the allocation of goodwill to the controlling and noncontrolling interest. b. Show how Holland determined its December 31, 2018, Investment in Zeeland account balance. Amount a1. Goodwill $ 43,760 X Controlling Interest NCI a2 Goodwill allocation $ 125,640 $ 169,400 X Amount b. Investment in Zeeland 12/31/18 $ 583,728
