On January 1, 2017, Holland Corporation paid $8 per share to a group of Zeeland Corporation...
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:
Current assets $ 14,000 Liabilities $ 212,000
Property and equipment (net) 268,000 Common stock 100,000
Patents 190,000 Retained earnings 160,000
$472,000 $472,000
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
Consideration transferred by Parflex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $344,000
10% noncontrolling interest fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,000
Fair value of Eagle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380,000
Book value of Eagle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324,000
Excess fair over book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,000
to equipment (undervalued, remaining life of 9 years) . . . . . . . . . . . . . . . 18,000
to goodwill (indefinite life) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,000
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. 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:
Holland Zeeland
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (640,500) $(428,500)
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325,000 200,000
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 34,000
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000 21,000
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . 52,000 63,500
Equity in Zeeland earnings . . . . . . . . . . . . . . . . . . . . . . .(42,300) –0–
Separate company net income . . . . . . . . . . . . . . . . . $ (211,800) $(110,000)
Retained earnings 1/1 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (820,200) $(296,500)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (211,800) (110,000)
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 30,000
Retained earnings 12/31 . . . . . . . . . . . . . . . . . . . . . . $ (982,000) $(376,500)
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 125,000 $ 81,500
Investment in Zeeland . . . . . . . . . . . . . . . . . . . . . . . . . . . 562,500 –0–
Property and equipment (net) . . . . . . . . . . . . . . . . . . . . 837,000 259,000
Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,000 147,500
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,673,500 $ 488,000
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (371,500) $ (11,500)
Common stock - Holland . . . . . . . . . . . . . . . . . . . . . . . . (320,000) –0–
Common stock - Zeeland . . . . . . . . . . . . . . . . . . . . . . . . –0– (100,000)
Retained earnings 12/31 . . . . . . . . . . . . . . . . . . . . . . . . (982,000) (376,500)
Total liabilities and owners equity . . . . . . . . . . . . . . . $(1,673,500) $(488,000)
At year-end, there were no intra-entity receivables or payables.
a. Compute the amount of goodwill recognized in Holland’s acquisition of Zeeland and the allocation
of goodwill to the controlling and noncontrolling interest.
b. Show how Holland determined its December 31, 2018, Investment in Zeeland account balance.
c. Prepare a worksheet to determine the amounts that should appear on Holland’s December 31,
2018, consolidated financial statements.
Homework Answers
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On January 1, 2017, Holland Corporation paid $8 per share to a
group of Zeeland Corporation...
On January 1, 2017, Holland Corporation paid $8 per share to a group of Zeeland Corporation...
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 $7.00 per share both before and after the acquisition by Holland. Zeeland’s acquisition date balance sheet follows: Current assets $ 14,900 Liabilities $ 225,500 Property and equipment (net) 288,900 Common...
On January 1, 2017, Holland Corporation paid $9 per share to a group of Zeeland Corporation...
On January 1, 2017, Holland Corporation paid $9 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 $8.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: S 14,200 328,200 Current assets Liabilities 215,000 Property and equipment (net) Patents Common...
On January 1, 2020, Holland Corporation paid $8 per share to a group of Zeeland Corporation...
On January 1, 2020, 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
$6.00 per share both before and after the acquisition by Holland.
Zeeland’s acquisition date balance sheet follows:
Current assets
$
16,300
Liabilities
$
246,500
Property and equipment (net)
250,300
Common...
On January 1, 2020, Holland Corporation paid $9 per share to a group of Zeeland Corporation...
On January 1, 2020, Holland Corporation paid $9 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 $8.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: $ $ Current assets Property and equipment (net) Patents 15,70 329,700 212,100 557,500...
On January 1, 2020, Holland Corporation paid $8 per share to a group of Zeeland Corporation...
On January 1, 2020, 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 $6.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $ 16,300 250, 300 219,900 $...
On January 1, 2020, Holland Corporation paid $7 per share to a group of Zeeland Corporation...
On January 1, 2020, Holland Corporation paid $7 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
$6.00 per share both before and after the acquisition by Holland.
Zeeland’s acquisition date balance sheet follows:
Current assets
$
15,200
Liabilities
$
230,000
Property and equipment (net)
249,200
Common...
On January 1, 2017, Holland Corporatlon pald $9 per share to a group of Zeeland Corporation shareholders to acquire 60,...
On January 1, 2017, Holland Corporatlon pald $9 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 remalning 40,000 shares of Zeeland continued to trade in the market close to Its recent average of $8.00 per share both before and after the acquisition by Holland. Zeeland's acquisitlon date balance sheet follows: 236, 000 $ 15, 600 Liabilities Common stock Current assets Property and equipment...
On January 1, 2016, Parflex Corporation exchanged $344,000 cash for 90 percent of Eagle Corporation’s outstanding...
On January 1, 2016, Parflex Corporation exchanged $344,000 cash for 90 percent of Eagle Corporation’s outstanding voting stock. Eagle’s acquisition date balance sheet follows: Cash and receivables $ 15,000 Liabilities $ 76,000 Inventory 35,000 Common stock 150,000 Property and equipment (net) 350,000 Retained earnings 174,000 $ 400,000 $ 400,000 On January 1, 2016, Parflex prepared the following fair-value allocation schedule: Consideration transferred by Parflex $ 344,000 10% noncontrolling interest fair value 36,000 Fair value of Eagle 380,000 Book value of...
On January 1, 2017, McIlroy, Inc., acquired a 60 percent interest in the common stock of...
On January 1, 2017, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $358,200. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $211,800. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $238,800. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $89,200 and an unrecorded customer list (15-year remaining life) assessed at a...
On January 1, 2016, Parflex Corporation exchanged $344,000 cash for 90 percent of Eagle Corporation’s outstanding...
On January 1, 2016, Parflex Corporation exchanged $344,000 cash
for 90 percent of Eagle Corporation’s outstanding voting stock.
Eagle’s acquisition date balance sheet follows:
Cash and receivables
$
15,000
Liabilities
$
76,000
Inventory
35,000
Common stock
150,000
Property and equipment (net)
350,000
Retained earnings
174,000
$
400,000
$
400,000
On January 1, 2016, Parflex prepared the following fair-value
allocation schedule:
Consideration transferred by Parflex
$
344,000
10% noncontrolling interest fair value
36,000
Fair value of Eagle
380,000
Book value of...
On January 1, 2017, Holland Corporation paid $9 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 $8.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: S 14,200 328,200 Current assets Liabilities 215,000 Property and equipment (net) Patents Common...
On January 1, 2020, 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
$6.00 per share both before and after the acquisition by Holland.
Zeeland’s acquisition date balance sheet follows:
Current assets
$
16,300
Liabilities
$
246,500
Property and equipment (net)
250,300
Common...
On January 1, 2020, Holland Corporation paid $9 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 $8.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: $ $ Current assets Property and equipment (net) Patents 15,70 329,700 212,100 557,500...
On January 1, 2020, 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 $6.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $ 16,300 250, 300 219,900 $...
On January 1, 2020, Holland Corporation paid $7 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
$6.00 per share both before and after the acquisition by Holland.
Zeeland’s acquisition date balance sheet follows:
Current assets
$
15,200
Liabilities
$
230,000
Property and equipment (net)
249,200
Common...
On January 1, 2017, Holland Corporatlon pald $9 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 remalning 40,000 shares of Zeeland continued to trade in the market close to Its recent average of $8.00 per share both before and after the acquisition by Holland. Zeeland's acquisitlon date balance sheet follows: 236, 000 $ 15, 600 Liabilities Common stock Current assets Property and equipment...
On January 1, 2016, Parflex Corporation exchanged $344,000 cash
for 90 percent of Eagle Corporation’s outstanding voting stock.
Eagle’s acquisition date balance sheet follows:
Cash and receivables
$
15,000
Liabilities
$
76,000
Inventory
35,000
Common stock
150,000
Property and equipment (net)
350,000
Retained earnings
174,000
$
400,000
$
400,000
On January 1, 2016, Parflex prepared the following fair-value
allocation schedule:
Consideration transferred by Parflex
$
344,000
10% noncontrolling interest fair value
36,000
Fair value of Eagle
380,000
Book value of...
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