Problem - 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 life was undervalued by $75,500 and a fully amortized trademark with an estimated 10-year remaining life had a $63,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $314,500.
Following are the separate financial statements for the year ending December 31, 2015:
|
Holtz
Corporation
|
Devine,
Inc.
|
|
Sales
|
$(742,000)
|
$(275,750)
|
|
Cost of goods sold
|
208,000
|
110,000
|
|
Operating expenses
|
342,000
|
69,750
|
|
Dividend income
|
(16,000)
|
0
|
|
Net income
|
$(208,0000
|
$(96,0000
|
|
Retained earnings, 1/1/15
|
$(764,000)
|
$(384,500)
|
|
Net income (above)
|
(208,000)
|
(96,000)
|
|
Dividends declared
|
60,000
|
20,000
|
|
Retained earnings, 12/31/15
|
$(912,000)
|
$(460,500)
|
|
Current assets
|
$198,500
|
$144,500
|
|
Investment in Devine, Inc
|
576,000
|
0
|
|
Buildings and equipment (net)
|
862,500
|
409,000
|
|
Trademarks
|
110,000
|
219,000
|
|
Total assets
|
$1,747,000
|
$772,500
|
|
Liabilities
|
$(515,000)
|
(212,000
|
|
Common stock
|
(320,000)
|
(100,000
|
|
Retained earnings, 12/31/15 (above)
|
(912,000)
|
(460,500
|
|
Total liabilities and equities
|
$(1,747,000)
|
(772,500
|
At year-end, there were no intra-entity receivables or payables.
Prepare a worksheet to consolidate these two companies as of December 31, 2015.