The Holtz Corporation acquired 80 percent of the 100,000outstanding voting shares of Devine, Inc., for $6.70 per share onJanuary 1, 2017. The remaining 20 percent of Devine’s shares alsotraded actively at $6.70 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 $57,000 and a fully amortized trademarkwith an estimated 10-year remaining life had a $69,000 fair value.At the acquisition date, Devine reported common stock of $100,000and a retained earnings balance of $224,000.

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

	Holtz Corporation				Devine, Inc.
Sales	$	(800,000	)		$	(379,500	)
Cost of goods sold		285,000				146,000
Operating expenses		299,000				130,500
Dividend income		(16,000	)			0
Net income	$	(232,000	)		$	(103,000	)
Retained earnings, 1/1/18	$	(777,000	)		$	(294,000	)
Net income (above)		(232,000	)			(103,000	)
Dividends declared		90,000				20,000
Retained earnings, 12/31/18	$	(919,000	)		$	(377,000	)
Current assets	$	238,500			$	177,000
Investment in Devine, Inc		536,000				0
Buildings and equipment (net)		870,000				357,000
Trademarks		137,000				188,000
Total assets	$	1,781,500			$	722,000
Liabilities	$	(542,500	)		$	(245,000	)
Common stock		(320,000	)			(100,000	)
Retained earnings, 12/31/18 (above)		(919,000	)			(377,000	)
Total liabilities and equities	$	(1,781,500	)		$	(722,000	)

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 $4.50 surrounding Holtz’s acquisition date, what is theimpact on goodwill?