The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Incorporated, for $7.00 per share on January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $7.00 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 $65,000 and a fully amortized trademark with an estimated 10-year remaining life had a $73,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $237,000. 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 $ (728,000) 232,000 334,000 (16,000) $ (178,000) $ (776,000) (178,000) 70,000 $ (884,000) $ 402,000 560,000 790,000 152,000 $ 1,904,000) $ (700,000) (320,000) (884,000) $ (1,904,000) At year-end, there were no intra-entity receivables or payables. Required: Devine, Incorporated $ (304,000) 136,000 74,000 $ (94,000) $ (307,000) (94,000) 20,000 $ (381,000) $ 179,000 в 323,000 225,000 $ 727,000 $ (246,000) (100,000) (381,000) $ (727,000) 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 $4.75 surrounding Holtz's acquisition date, what is the impact on goodwill?
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Incorporated, for $7.00 per share on January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $7.00 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 $65,000 and a fully amortized trademark with an estimated 10-year remaining life had a $73,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $237,000. 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 $ (728,000) 232,000 334,000 (16,000) $ (178,000) $ (776,000) (178,000) 70,000 $ (884,000) $ 402,000 560,000 790,000 152,000 $ 1,904,000) $ (700,000) (320,000) (884,000) $ (1,904,000) At year-end, there were no intra-entity receivables or payables. Required: Devine, Incorporated $ (304,000) 136,000 74,000 $ (94,000) $ (307,000) (94,000) 20,000 $ (381,000) $ 179,000 в 323,000 225,000 $ 727,000 $ (246,000) (100,000) (381,000) $ (727,000) 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 $4.75 surrounding Holtz's acquisition date, what is the impact on goodwill?
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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Transcribed Image Text:The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Incorporated, for $7.00 per share on
January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $7.00 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 $65,000 and a fully amortized trademark with
an estimated 10-year remaining life had a $73,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and
a retained earnings balance of $237,000.
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
$ (728,000)
232,000
334,000
(16,000)
$ (178,000)
$ (776,000)
(178,000)
70,000
$ (884,000)
$ 402,000
560,000
790,000
152,000
$ 1,904,000)
$ (700,000)
(320,000)
(884,000)
$ (1,904,000)
At year-end, there were no intra-entity receivables or payables.
Required:
Devine,
Incorporated
$ (304,000)
136,000
74,000
$ (94,000)
$ (307,000)
(94,000)
20,000
$ (381,000)
$ 179,000
в
323,000
225,000
$ 727,000
$ (246,000)
(100,000)
(381,000)
$ (727,000)
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 $4.75 surrounding Holtz's acquisition date, what is the impact
on goodwill?
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