The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shar

Question

The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.10 per share on January 1, 2014. The remaining 20 percent of Devine’s shares also traded actively at $6.10 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 life was undervalued by $67,500 and a fully amortized trademark with an estimated 10-year remaining life had a $61,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $149,500.

Following are the separate financial statements for the year ending December 31, 2015:

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 $3.78 surrounding Holtz’s acquisition date, what is the impact on goodwill?

Following are the separate financial statements for the year ending December 31, 2015:

Explanation / Answer

The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shar

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