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:

At year-end, there were no intra-entity receivables or payables.

a. Prepare a worksheet to consolidate these two companies as of December 31, 2021.

b. Prepare a 2021 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?

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Holtz Devine, Corporatlon Inc. Sales.... Cost of goods sold Operating expenses Dividend income $ (641,000) $(399,000) 198,000 273,000 176,000 126,000 (16,000) $ (186,000) $ (97,000) $ 762,000) $(296,500) (186,000) 70,000 -0- Net income Retained earnings, 1/1/21 Net income (above) Dividends declared (97,000) 20,000 Retained earnings, 12/31/21 $ (878,000) $(373,500) Current assets. $ 121,000 $ 120,500 Investment in Devine, Inc. . 576,000 -0- 335,000 236,000 Buildings and equipment (net) 887,000 149,000 Trademarks Total assets $ 1,733,000 $ 691,500 $ (535,000) $(218,000) (320,000) Liabilities (100,000 (878,000) (373,500) $(1,733,000) $(691,500) Common stock Retained earnings, 12/31/21 (above) Total liabilities and equities