On January 1, 2023, Holland Corporation paid $7 per share to a group of Zeeland Corporation shareholders to acquire 60,000 sharesof Zeeland's outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeelandcontinued to trade in the market close to its recent average of $5.50 per share both before and after the acquisition by Holland.Zeeland's acquisition date balance sheet follows:Current assets$ 16,100 LiabilitiesProperty and equipment (net) 230,100 Connon stockPatents217,300 Retained earnings$ 463,500On January 1, 2023, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by$46,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $275,200. Zeeland'sacquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland'sacquisition-date fair value over its book value was attributed to goodwill.The companies' financial statements for the year ending December 31, 2024, follow:SalesCost of goods soldDepreciation expenseAmortization expenseOther operating expensesEquity in Zeeland earningsSeparate company net incone.Retained earnings, 1/1Net incomeDividends declaredRetained earnings, 12/31Current assetsInvestment in ZeelandProperty and equipment (net)PatentsTotal assetsLiabilitiesCommon stock-HollandCommon stock-ZeelandRetained earnings, 12/31Total liabilities and owners' equityAccountReq A and Ba1. GoodwillReg Ca2. Goodwillallocational. Compute the amount of goodwill recognized in Holland's aa2. Show the allocation of goodwill to the controlling and nonb. Show how Holland determined its December 31, 2024, InveNote: Negative amounts should be shown with a minus sign.ControllingInterest95,280At year-end, there were no intra-entity receivables or payables.Required:a1. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland.a2. Show the allocation of goodwill to the controlling and noncontrolling interest.b. Show how Holland determined its December 31, 2024, Investment in Zeeland account balance.b. Initial Valueb. Change in Zeeland's Retained earningsb. Excess amortizationb. Investment in Zeelandc. Prepare a worksheet to determine the amounts that should appear on Holland's December 31, 2024, consolidated financialstatements.Amount98,800Noncontrollinginterest$$Holland$ (535,800)271,80067,00016,10060,400(56,568)$ (177,068)$ (822,300)(177,068)50,000$ (949,368)3,520$ 127,100576,456858,000153,200$ 1,714,756$ (445,388)(320,000)(949,368)(1,714,756)Amount620,520243,500100,000120,000463,5000420,000✔✔200,5200xZeeland$ (449,500)210,50031,90018,90057,2000$ (131,000)$ (353,200)(131,000)30,000$ (454,200)$ 102,500280,000177,500$ 560,000$ (5,800)0(100,000)(454,200)$ (560,000)

PartciularsAmountRemaining LifeAmortizationConsideration transferred by…

Required: a1. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland. a2. Show the allocation of goodwill to the controlling and noncontrolling interest. b. Show how Holland determined its December 31, 2024, Investment in Zeeland account balance. c. Prepare a worksheet to determine the amounts that should appear on Holland's December 31, 2024, consolidated financial statements.

Required: a1. Compute the amount of goodwill recognized in Holland's acquisition of Zeeland. a2. Show the allocation of goodwill to the controlling and noncontrolling interest. b. Show how Holland determined its December 31, 2024, Investment in Zeeland account balance. c. Prepare a worksheet to determine the amounts that should appear on Holland's December 31, 2024, consolidated financial statements.

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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On January 1, 2023, 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 $6.50 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $ 14,000 Liabilities 268,000 Common stock. 190,000 Retained earnings $ 212,000 100,000 160,000 $ 472,000 $ 472,000 es On January 1, 2023, Holland assessed the carrying amount of Zeetand's equipment (5-year remaining life) to be undervalued by $55,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $285,000. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland's…
On January 1, 2023, 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 $6.50 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $ 14,800 Liabilities 268,800 Common stock 200,400 Retained earnings $ 224,000 100,000 160,000 $ 484,000 $ 484,000 On January 1, 2023, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $63,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $315,600. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland's…
On January 1, 2023, Holland Corporation paid $7 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 $5.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $14,700 Liabilities 288,708 Common stock 199,100 Retained earnings $422,500 $222,500 100,000 100,000 $ 422,500 On January 1, 2023, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $62,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $226,900. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland's…
On January 1, 2023, Holland Corporation paid $7 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 $5.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents On January 1, 2023, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $43,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $246,400. 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…
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On January 1, 2020, 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 $6.50 per share both before and after the acquisition by Holland. Zeeland’s acquisition date balance sheet follows: Current assets $ 14,000 Liabilities $ 212,000 Property and equipment (net) 268,000 Common stock 100,000 Patents 190,000 Retained earnings 160,000 $ 472,000 $ 472,000 On January 1, 2020, Holland assessed the carrying amount of Zeeland’s equipment (5-year remaining life) to be undervalued by $55,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $285,000. Zeeland’s acquisition-date fair values for its current assets and liabilities were equal to…
On January 1, 2020, Holland Corporation paid $7 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 $5.50 per share both before and after the acquisition by Holland. Zeeland’s acquisition date balance sheet follows: Current assets $ 15,100 Liabilities $ 228,500 Property and equipment (net) 229,100 Common stock 100,000 Patents 204,300 Retained earnings 120,000 $ 448,500 $ 448,500 On January 1, 2020, Holland assessed the carrying amount of Zeeland’s equipment (5-year remaining life) to be undervalued by $66,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $254,600. Zeeland’s acquisition-date fair values for its current assets and liabilities were equal to…
On January 1, 2020, Holland Corporation paid $9 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 $8.00 per share both before and after the acquisition by Holland. Zeeland’s acquisition date balance sheet follows: Current assets $ 14,300 Liabilities $ 216,500 Property and equipment (net) 328,300 Common stock 100,000 Patents 193,900 Retained earnings 220,000 $ 536,500 $ 536,500 On January 1, 2020, Holland assessed the carrying amount of Zeeland’s equipment (5-year remaining life) to be undervalued by $58,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $300,600. Zeeland’s acquisition-date fair values for its current assets and liabilities were equal to…
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Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2018. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2018, Sea-Breeze had the following assets and liabilities: Book Value Fair Value Current assets $ 150,000 $ 150,000 Land 200,000 200,000 Buildings (net) (6-year remaining life) 300,000 360,000 Equipment (net) (4-year remaining life) 300,000 280,000 Patent (10-year remaining life) 0 100,000 Liabilities (400,000 ) (400,000 ) The companies’ financial statements for the year ending December 31, 2021, follow: Nascent Sea-Breeze Revenues $ (600,000 ) $ (300,000 ) Operating expenses 410,000 210,000 Investment income (42,000 ) 0 Net income $ (232,000 ) $ (90,000 ) Retained earnings, 1/1/21 $ (700,000 ) $ (300,000 ) Net income…
Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2018. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2018, Sea-Breeze had the following assets and liabilities: Book Value Fair Value Current assets $ 150,000 $ 150,000 Land 200,000 200,000 Buildings (net) (6-year remaining life) 300,000 360,000 Equipment (net) (4-year remaining life) 300,000 280,000 Patent (10-year remaining life) 0 100,000 Liabilities (400,000 ) (400,000 ) The companies’ financial statements for the year ending December 31, 2021, follow: Nascent Sea-Breeze Revenues $ (600,000 ) $ (300,000 ) Operating expenses 410,000 210,000 Investment income (42,000 ) 0 Net income $ (232,000 ) $ (90,000 ) Retained earnings, 1/1/21 $ (700,000 ) $ (300,000 ) Net income…