On January 1, 2017, 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: On January 1, 2017, 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 their carrying amounts. Zeeland books showed 260,000 for net stockholder equity Any remaining excess of Zeeland’s acquisition-date fair value over its book value was attributed to goodwill. The companies’ financial statements for the year ending December 31, 2018, follow: e. The allocation of dividends declared by Holland to Zeeland and NCI for the consolidation entries needed in preparing the consolidated financial statements. f. Prepare a worksheet to determine the amounts that should appear on Holland’s December 31, 2018, consolidated financial statements.
On January 1, 2017, 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:
On January 1, 2017, 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 their carrying amounts.
Zeeland books showed 260,000 for net
Any remaining excess of Zeeland’s acquisition-date fair value over its book value was attributed to
The companies’ financial statements for the year ending December 31, 2018, follow:
e. The allocation of dividends declared by Holland to Zeeland and NCI for the consolidation entries needed in preparing the consolidated financial statements.
f. Prepare a worksheet to determine the amounts that should appear on Holland’s December 31, 2018, consolidated financial statements.
![Holland
Zeeland
Sales
$ (640,500)
$(428,500)
Cost of goods sold
Depreciation expense
Amortization expense
325,000
200,000
34,000
21,000
80,000
14,000
Other operating expenses
Equity in Zeeland earnings
52,000
63,500
(42,300)
$ (211,800)
$ (820,200)
(211,800)
50,000
$ (982.000)
$ 125,000
562,500
837,000
-0-
Separate company net income.
$(110,000)
Retained earnings 1/1
Net income...
Dividends declared..
Retained earnings 12/31.
Current assets.
Investment in Zeeland..
Property and equipment (net).
Patents .
$(296,500)
(110,000)
30,000
$(376,500)
$ 81,500
-0-
259,000
149,000
$ 1,673,500
$ (371,500)
(320,000)
-0-
(982,000)
$(1,673,500)
147,500
$ 488,000
$ (11,500)
Total assets.
Liabilities...
Common stock - Holland.
-0-
Common stock - Zeeland
Retained earnings 12/31.
Total liabilities and owners equity..
(100,000)
(376,500)
$(488,000)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F13e3e051-4f84-4390-86ef-a2b3c8bd976b%2Fd1882199-9fd0-4e2a-9f44-5a3f9538967e%2Fexzm2yb_processed.png&w=3840&q=75)
![$ 14,000 Liabilities
268,000 Common stock
190,000 Retained earnings
$212,000
100,000
160,000
Current assets
Property and equipment (net)
Patents
$472,000
$472,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F13e3e051-4f84-4390-86ef-a2b3c8bd976b%2Fd1882199-9fd0-4e2a-9f44-5a3f9538967e%2Ftcercq5_processed.png&w=3840&q=75)
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