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January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $7.60 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 $72,500 and a fully amortized trademark with an estimated 10-year remaining life had a $77,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $348,500. Following are the separate financial statements for the year ending December 31, 2024: Accounts Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings, 12/31/24 Current assets Investment in Devine, Incorporated Buildings and equipment (net) Trademarks Total assets Liabilities Common stock Retained earnings, 12/31/24 (above) Total liabilities and equities Holtz Corporation $ (614,000) 216,000 251,000 (16,000) $ (163,000) $ (712,000) (163,000) 80,000 $ (795,000) $ 322,000 608,000 710,000 189,000 $ 1,829,000) $ (714,000) (320,000) (795,000) $ (1,829,000) At year-end, there were no intra-entity receivables or payables. Required: Devine, Incorporated $ (408,250) 174,000 122,250 0 $ (112,000) $ (418,500) (112,000) 20,000 $ (510,500) $ 305,500 0 436,000 142,000 $ 883,500 $ (273,000) (100,000) (510,500) $ (883,500) a. Prepare a worksheet to consolidate these two companies as of December 31, 2024. b. Prepare a 2024 consolidated income statement for Holtz and Devine. c. If instead the noncontrolling interest shares of Devine had traded for $5.98 surrounding Holtz's acquisition date, what is the impact on goodwill?

January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $7.60 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 $72,500 and a fully amortized trademark with an estimated 10-year remaining life had a $77,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $348,500. Following are the separate financial statements for the year ending December 31, 2024: Accounts Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings, 12/31/24 Current assets Investment in Devine, Incorporated Buildings and equipment (net) Trademarks Total assets Liabilities Common stock Retained earnings, 12/31/24 (above) Total liabilities and equities Holtz Corporation $ (614,000) 216,000 251,000 (16,000) $ (163,000) $ (712,000) (163,000) 80,000 $ (795,000) $ 322,000 608,000 710,000 189,000 $ 1,829,000) $ (714,000) (320,000) (795,000) $ (1,829,000) At year-end, there were no intra-entity receivables or payables. Required: Devine, Incorporated $ (408,250) 174,000 122,250 0 $ (112,000) $ (418,500) (112,000) 20,000 $ (510,500) $ 305,500 0 436,000 142,000 $ 883,500 $ (273,000) (100,000) (510,500) $ (883,500) a. Prepare a worksheet to consolidate these two companies as of December 31, 2024. b. Prepare a 2024 consolidated income statement for Holtz and Devine. c. If instead the noncontrolling interest shares of Devine had traded for $5.98 surrounding Holtz's acquisition date, what is the impact on goodwill?

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 18E
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January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $7.60 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 $72,500 and a fully amortized trademark with an estimated 10-year remaining life had a $77,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $348,500. Following are the separate financial statements for the year ending December 31, 2024: Holtz Corporation $ (614,000) 216,000 251,000 (16,000) Accounts Sales Cost of goods sold Operating expenses Dividend income Net income $ (163,000) Retained earnings, 1/1/24 $ (712,000) Net income (above) Dividends declared Retained earnings, 12/31/24 Current assets Investment in Devine, Incorporated Buildings and equipment (net) Trademarks Total assets Liabilities Common stock Retained earnings, 12/31/24 (above) Total liabilities and equities (163,000) 80,000 $ (795,000) $ 322,000 608,000 710,000 189,000 $ 1,829,000) $ (714,000) (320,000) (795,000) $ (1,829,000) At year-end, there were no intra-entity receivables or payables. Required: Devine, Incorporated $ (408,250) 174,000 122,250 0 $ (112,000) $ (418,500) (112,000) 20,000 $ (510,500) $ 305,500 0 436,000 142,000 $ 883,500 $ (273,000) (100,000) (510,500) $ (883,500) a. Prepare a worksheet to consolidate these two companies as of December 31, 2024. b. Prepare a 2024 consolidated income statement for Holtz and Devine. c. If instead the noncontrolling interest shares of Devine had traded for $5.98 surrounding Holtz's acquisition date, what is the impact on goodwill?
Transcribed Image Text:January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $7.60 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 $72,500 and a fully amortized trademark with an estimated 10-year remaining life had a $77,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $348,500. Following are the separate financial statements for the year ending December 31, 2024: Holtz Corporation $ (614,000) 216,000 251,000 (16,000) Accounts Sales Cost of goods sold Operating expenses Dividend income Net income $ (163,000) Retained earnings, 1/1/24 $ (712,000) Net income (above) Dividends declared Retained earnings, 12/31/24 Current assets Investment in Devine, Incorporated Buildings and equipment (net) Trademarks Total assets Liabilities Common stock Retained earnings, 12/31/24 (above) Total liabilities and equities (163,000) 80,000 $ (795,000) $ 322,000 608,000 710,000 189,000 $ 1,829,000) $ (714,000) (320,000) (795,000) $ (1,829,000) At year-end, there were no intra-entity receivables or payables. Required: Devine, Incorporated $ (408,250) 174,000 122,250 0 $ (112,000) $ (418,500) (112,000) 20,000 $ (510,500) $ 305,500 0 436,000 142,000 $ 883,500 $ (273,000) (100,000) (510,500) $ (883,500) a. Prepare a worksheet to consolidate these two companies as of December 31, 2024. b. Prepare a 2024 consolidated income statement for Holtz and Devine. c. If instead the noncontrolling interest shares of Devine had traded for $5.98 surrounding Holtz's acquisition date, what is the impact on goodwill?
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