The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Incorporated, for $6.40 per share onJanuary 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $6.40 per share before and after Holtz'sacquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine'sunderlying accounts except that a building with a 5-year future life was undervalued by $62,000 and a fully amortized trademark withan estimated 10-year remaining life had a $67,000 fair value. At the acquisition date, Devine reported common stock of $100,000 anda retained earnings balance of $260,000.Following are the separate financial statements for the year ending December 31, 2024:HoltzCorporation$ (787,000)282,000346,000(16,000)AccountsSalesCost of goods soldOperating expensesDividend incomeNet income$ (175,000)Retained earnings, 1/1/24$ (727,000)Net income (above)Dividends declaredRetained earnings, 12/31/24Current assetsInvestment in Devine, IncorporatedBuildings and equipment (net)TrademarksTotal assetsLiabilitiesCommon stockRetained earnings, 12/31/24 (above)Total liabilities and equities(175,000)50,000$ (852,000)$ 379,500512,000785,000148,000$ 1,824,500)$ (652,500)(3201000)(852,000)$ (1,824,500)At year-end, there were no intra-entity receivables or payables.Devine,Incorporated$ (392,000)105,000117,0000$ (170,000)$ (330,000)(170,000)20,000$ (480,000)$ 162,0000422,000206,000$ 790,000$ (210,000)(100,000)(480,000)$ (790,000)Required: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 $4.89 surrounding Holtz's acquisition date, what is the impacton goodwill?Complete this question by entering your answers in the tabs below.Required A Required BRequired CPrepare a 2024 consolidated income statement for Holtz and Devine.Note: Enter all amounts as positive values.HOLTZ CORPORATION AND DEVINE, INCORPORATEDConsolidated Income StatementFor Year Ending December 31, 2024Total expensesTo noncontrolling interestTo Holtz Corporation0$0$0< Required ARequired C >

Consolidation -The financial information from all companies connected to a parent firm is reflected…

Answered: The Holtz Corporation acquired 80…

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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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…
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.35 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $7.35 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 $70,000 and a fully amortized trademark with an estimated 10-year remaining life had a $70,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $264,000. Following are the separate financial statements for the year ending December 31, 2021: HoltzCorporation Devine,Inc. Sales $ (741,000 ) $ (371,000 ) Cost of goods sold 218,000 173,000 Operating expenses 292,000 96,000 Dividend income (16,000 ) 0 Net income $ (247,000…
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.15 per share on January 1, 2020. The remaining 20 percent of Devine's shares also traded actively at $7.15 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 $75,500 and a fully amortized trademark with an estimated 10-year remaining life had a $63,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $309,500. Following are the separate financial statements for the year ending December 31, 2021: Sales Cost of goods sold Operating expenses Dividend income 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…
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.45 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $6.45 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 $65,500 and a fully amortized trademark with an estimated 10-year remaining life had a $85,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $224,500. Following are the separate financial statements for the year ending December 31, 2021: HoltzCorporation Devine,Inc. Sales $ (747,000 ) $ (432,750 ) Cost of goods sold 207,000 135,000 Operating expenses 338,000 126,750 Dividend income (16,000 ) 0 Net income $…
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.50 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $7.50 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 $46,500 and a fully amortized trademark with an estimated 10-year remaining life had a $76,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $351,500. Following are the separate financial statements for the year ending December 31, 2021: HoltzCorporation Devine,Inc. Sales $ (786,000 ) $ (379,000 ) Cost of goods sold 291,000 118,000 Operating expenses 289,000 78,000 Dividend income (16,000 ) 0 Net income $ (222,000 )…
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.20 per share on January 1, 2020. The remaining 20 percent of Devine's shares also traded actively at $7.20 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 five-year future life was undervalued by $85,500 and a fully amortized trademark with an estimated 10-year remaining life had a $64,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $226,500. Following are the separate financial statements for the year ending December 31, 2021: Holtz Devine, Corporation $ Inc. (641,000) 198,000 273,000 $ (399,000) 176,000 126,000 Sales Cost of goods sold Operating expenses (16,000) ( 186,000) Dividend income $ (97,000) $ (296,500) (97,000) 20,000 $ (373,500) Net…
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.00 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $6.00 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 $70,500 and a fully amortized trademark with an estimated 10-year remaining life had a $62,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $158,500. Following are the separate financial statements for the year ending December 31, 2021: HoltzCorporation Devine,Inc.Sales$(731,000) $(316,000)Cost of goods sold 276,000 149,000 Operating expenses 261,000 83,000 Dividend income (16,000) 0 Net income$(210,000) $(84,000)Retained earnings, 1/1/21$(748,000)…
The Hoover Corporation acquired 80 percent of the 100,000 outstanding voting shares of Rainbow, Inc., for $6.40 per share on January 1, 2020. The remaining 20 percent of Rainbow’s shares also traded actively at $4.89 per share before and after Hoover’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Rainbow’s underlying accounts except that a building with a 5-year future life was undervalued by $62,000 and a fully amortized trademark with an estimated 10-year remaining life had a $67,000 fair value. At the acquisition date, Rainbow reported common stock of $100,000 and a retained earnings balance of $260,000. On January 1, 2021, Rainbow reported retained earnings of $330,000. During year 2021, Rainbow reported net income of $170,000 and declared dividend of $20,000. What is the balance of the noncontrolling interest in the subsidiary on December 31, 2021?
On January 3, 2023, Trycker, Incorporated acquired 40% of the outstanding common stock of Inkblot Company for $2,400,000. This investment gave Trycker the ability to exercise significant influence over Inkblot. Inkblot's assets on that date were recorded at $8,000,000 with liabilities of $2,000,000. There were no other differences between book and fair values. During 2023, Inkblot reported net income of $500,000 and paid dividends of $300,000. The fair value of Inkblot at December 31, 2023, is $7,000,000. Trycker elects the fair value option for its investment in Inkblot. How are dividends received from Inkblot reflected in Trycker's accounting records for 2023?
Parent Inc. purchased 60,000 of the outstanding (specified below) voting shares of Sub, for $625,000 (the total number of outstanding shares varies in the questions below) on January 1, 2021. On the date of acquisition, Sub's common shares and retained earnings were valued at $235,000 and $280,000, respectively. Subs book values approximated its fair values on the acquisition date with the exception of a patent, for which the fair value of the patent was $40,000 greater than book value. Q: Assume that the total number of outstanding shares for Sub was, 78,000 (remember Parent purchased 60,000). On January 2, 2021, Parent sold 12,000 shares of Sub on the open market for $108,000. What would be the amount of the gain or loss on the sale of these shares?
On January 1, 2022, Palmcroft Company acquired 100 percent of the outstanding voting shares of Salt River, Incorporated, for $776,000 cash. At January 1, 2022, Salt River’s net assets had a total carrying amount of $543,200. Equipment (eight-year remaining life) was undervalued on Salt River’s financial records by $126,000. Any remaining excess fair over book value was attributed to a database developed by Salt River (four-year remaining life), but not recorded on its books. Palmcroft applies the equity method to account for its investment in Salt River. Each year since the acquisition, Salt River has declared a $46,000 dividend. Salt River recorded net income of $111,000 in 2022 and $125,600 in 2023. Selected account balances from the two companies’ individual records were as follows: Items Palmcroft Salt River 2024 Revenues $ 554,000 $ 349,400 2024 Expenses 362,000 251,000 2024 Income from Salt River 55,950 - Retained earnings, 12/31/24 298,150 231,300 On its…
On January 1, 2022, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Incorporated, for $459,000 cash. The acquisition - date fair value of the noncontrolling interest was $51,000. At January 1, 2022, Star's net assets had a total carrying amount of $356,000. Equipment (eight-year remaining life) was undervalued on Star's financial records by $63, 200. Any remaining excess fair value over book value was attributed to unpatented technology developed by Star (four-year remaining life), but not recorded on its books. Star recorded net income of $55,300 in 2022 and $63,200 in 2023. Each year since the acquisition, Star has declared a $15,800 dividend. At January 1, 2024, Pride's retained earnings show a $197,500 balance. Selected account balances for the two companies from their separate operations were as follows: Items Pride Star 2024 Revenues $393,500 $225,200 2024 Expenses 276, 600 154, 100 1. What is consolidated net income for 2024? 2. Assuming that…

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