The Holtz Corporation acquired 80 percent of the 100,000outstanding voting shares of Devine, Inc., for $7.50 per share onJanuary 1, 2017. The remaining 20 percent of Devine’s shares alsotraded actively at $7.50 per share before and after Holtz’sacquisition. An appraisal made on that date determined that allbook values appropriately reflected the fair values of Devine’sunderlying accounts except that a building with a 5-year futurelife was undervalued by $46,500 and a fully amortized trademarkwith an estimated 10-year remaining life had a $76,000 fair value.At the acquisition date, Devine reported common stock of $100,000and a retained earnings balance of $351,500.

Following are the separate financial statements for the yearending December 31, 2018:

	Holtz Corporation				Devine, Inc.
Sales	$	(786,000	)		$	(379,000	)
Cost of goods sold		291,000				118,000
Operating expenses		289,000				78,000
Dividend income		(16,000	)			0
Net income	$	(222,000	)		$	(183,000	)
Retained earnings, 1/1/18	$	(733,000	)		$	(421,500	)
Net income (above)		(222,000	)			(183,000	)
Dividends declared		90,000				20,000
Retained earnings, 12/31/18	$	(865,000	)		$	(584,500	)
Current assets	$	311,500			$	272,500
Investment in Devine, Inc		600,000				0
Buildings and equipment (net)		722,500				456,000
Trademarks		156,000				212,000
Total assets	$	1,790,000			$	940,500
Liabilities	$	(605,000	)		$	(256,000	)
Common stock		(320,000	)			(100,000	)
Retained earnings, 12/31/18 (above)		(865,000	)			(584,500	)
Total liabilities and equities	$	(1,790,000	)		$	(940,500	)

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

1. Prepare a worksheet to consolidate these two companies as ofDecember 31, 2018.

2. Prepare a 2018 consolidated income statement for Holtz andDevine.

3. If instead the noncontrolling interest shares of Devine hadtraded for $5.74 surrounding Holtz’s acquisition date, what is theimpact on goodwill?