Fair value of Kennedy (consideration transferred). Carrying amount acquired.. Excess fair value ....... to buildings (undervalued)... to licensing agreements (overvalued) to goodwill (indefinite life) .. $3,300,000 2,600,000 $ 700,000 $ 382,000 274,000 (108,000) $ 426,000 Accounts Casey Kennedy $ 172,500 347,000 263,500 Cash 457,000 1,655,000 1,310,000 3,300,000 6,315,000 -0- Accounts receivable. Inventory.. Investment in Kennedy Buildings (net) .... Licensing agreements Goodwill .. -0- 2,090,000 3,070,000 -0- 347,000 $ 13,384,000 $ (394,000) (3,990,000) (3,000,000) $ 5,943,000 $ (393,000) (2,950,000) (1,000,000) (500,000) (1,100,000) $ (5,943,000) Total assets . Accounts payable . Long-term debt . Common stock Additional paid-in capital. Retained earnings..... Total liabilities and equities.. (6,000,000) $ (13,384,000)
Fair value of Kennedy (consideration transferred). Carrying amount acquired.. Excess fair value ....... to buildings (undervalued)... to licensing agreements (overvalued) to goodwill (indefinite life) .. $3,300,000 2,600,000 $ 700,000 $ 382,000 274,000 (108,000) $ 426,000 Accounts Casey Kennedy $ 172,500 347,000 263,500 Cash 457,000 1,655,000 1,310,000 3,300,000 6,315,000 -0- Accounts receivable. Inventory.. Investment in Kennedy Buildings (net) .... Licensing agreements Goodwill .. -0- 2,090,000 3,070,000 -0- 347,000 $ 13,384,000 $ (394,000) (3,990,000) (3,000,000) $ 5,943,000 $ (393,000) (2,950,000) (1,000,000) (500,000) (1,100,000) $ (5,943,000) Total assets . Accounts payable . Long-term debt . Common stock Additional paid-in capital. Retained earnings..... Total liabilities and equities.. (6,000,000) $ (13,384,000)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On January 1, 2018 Casey Corporation exchanged $3,300,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems.
At the acquisition date, Casey prepared the following fair-value allocation schedule:
Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records.
Prepare an acquisition-date consolidated
Transcribed Image Text:Fair value of Kennedy (consideration transferred).
Carrying amount acquired..
Excess fair value .......
to buildings (undervalued)...
to licensing agreements (overvalued)
to goodwill (indefinite life) ..
$3,300,000
2,600,000
$ 700,000
$ 382,000
274,000
(108,000)
$ 426,000
Transcribed Image Text:Accounts
Casey
Kennedy
$ 172,500
347,000
263,500
Cash
457,000
1,655,000
1,310,000
3,300,000
6,315,000
-0-
Accounts receivable.
Inventory..
Investment in Kennedy
Buildings (net) ....
Licensing agreements
Goodwill ..
-0-
2,090,000
3,070,000
-0-
347,000
$ 13,384,000
$ (394,000)
(3,990,000)
(3,000,000)
$ 5,943,000
$ (393,000)
(2,950,000)
(1,000,000)
(500,000)
(1,100,000)
$ (5,943,000)
Total assets .
Accounts payable .
Long-term debt .
Common stock
Additional paid-in capital.
Retained earnings.....
Total liabilities and equities..
(6,000,000)
$ (13,384,000)
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