05 Jun Question 1) The Holtz Corporation acquired 80 percen
Question
1)
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of
Devine, Inc., for $7.20 per share on January 1, 2014. 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 5-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.
LO 4-5, 4-6, 4-7
Consolidated Financial Statements and Outside Ownership195
Following are the separate financial statements for the year ending December 31, 2015:
Holtz
Corporation
Devine,
Inc.
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (641,000) $(399,000)
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,000 176,000
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273,000 126,000
Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,000) –0–
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (186,000) $ (97,000)
Retained earnings, 1/1/15 . . . . . . . . . . . . . . . . . . . . . . . . $ (762,000) $(296,500)
Net income (above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (186,000) (97,000)
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 20,000
Retained earnings, 12/31/15 . . . . . . . . . . . . . . . . . . . . . . $ (878,000) $(373,500)
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 121,000 $ 120,500
Investment in Devine, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 576,000 –0–
Buildings and equipment (net) . . . . . . . . . . . . . . . . . . . . 887,000 335,000
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,000 236,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,733,000 $ 691,500
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (535,000) $(218,000)
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (320,000) (100,000)
Retained earnings, 12/31/15 (above) . . . . . . . . . . . . . . . . (878,000) (373,500)
Total liabilities and equities . . . . . . . . . . . . . . . . . . . . . $(1,733,000) $(691,500)
At year-end, there were no intra-entity receivables or payables.
a.Prepare a worksheet to consolidate these two companies as of December 31, 2015.
b.Prepare a 2015 consolidated income statement for Holtz and Devine.
c.If instead the noncontrolling interest shares of Devine had traded for $4.76 surrounding
Holtz’s acquisition date, what is the impact on goodwill?
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.