On January 1, 2021, Casey Corporation exchanged $3,210,000 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: Fair value of Kennedy (consideration transferred) $ 3,210,000 Carrying amount acquired 2,600,000 Excess fair value $ 610,000 to buildings (undervalued) $ 393,000 to licensing agreements (overvalued) (193,000 ) 200,000 to goodwill (indefinite life) $ 410,000 Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses). Accounts Casey Kennedy Cash $ 480,000 $ 166,500 Accounts receivable 1,420,000 295,000 Inventory 1,490,000 126,500 Investment in Kennedy 3,210,000 0 Buildings (net) 5,992,500 2,580,000 Licensing agreements 0 3,440,000 Goodwill 249,500 0 Total assets $ 12,842,000 $ 6,608,000 Accounts payable $ (372,000 ) $ (438,000 ) Long-term debt (3,470,000 ) (3,570,000 ) Common stock (3,000,000 ) (1,000,000 ) Additional paid-in capital 0 (500,000 ) Retained earnings (6,000,000 ) (1,100,000 ) Total liabilities and equities $ (12,842,000 ) $ (6,608,000 ) Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation. (For accounts where multiple consolidation entries are required,combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.)

On January 1, 2021, Casey Corporation exchanged $3,210,000 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: Fair value of Kennedy (consideration transferred) $ 3,210,000 Carrying amount acquired 2,600,000 Excess fair value $ 610,000 to buildings (undervalued) $ 393,000 to licensing agreements (overvalued) (193,000 ) 200,000 to goodwill (indefinite life) $ 410,000 Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses). Accounts Casey Kennedy Cash $ 480,000 $ 166,500 Accounts receivable 1,420,000 295,000 Inventory 1,490,000 126,500 Investment in Kennedy 3,210,000 0 Buildings (net) 5,992,500 2,580,000 Licensing agreements 0 3,440,000 Goodwill 249,500 0 Total assets $ 12,842,000 $ 6,608,000 Accounts payable $ (372,000 ) $ (438,000 ) Long-term debt (3,470,000 ) (3,570,000 ) Common stock (3,000,000 ) (1,000,000 ) Additional paid-in capital 0 (500,000 ) Retained earnings (6,000,000 ) (1,100,000 ) Total liabilities and equities $ (12,842,000 ) $ (6,608,000 ) Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation. (For accounts where multiple consolidation entries are required,combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

At the acquisition date, Casey prepared the following fair-value allocation schedule:


Fair value of Kennedy (consideration transferred)				$	3,210,000
Carrying amount acquired					2,600,000
Excess fair value				$	610,000
to buildings (undervalued)	$	393,000
to licensing agreements (overvalued)		(193,000	)		200,000
to goodwill (indefinite life)				$	410,000

Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses).

Accounts	Casey		Kennedy
Cash	$	480,000		$	166,500
Accounts receivable		1,420,000			295,000
Inventory		1,490,000			126,500
Investment in Kennedy		3,210,000			0
Buildings (net)		5,992,500			2,580,000
Licensing agreements		0			3,440,000
Goodwill		249,500			0
Total assets	$	12,842,000		$	6,608,000
Accounts payable	$	(372,000	)	$	(438,000	)
Long-term debt		(3,470,000	)		(3,570,000	)
Common stock		(3,000,000	)		(1,000,000	)
Additional paid-in capital		0			(500,000	)
Retained earnings		(6,000,000	)		(1,100,000	)
Total liabilities and equities	$	(12,842,000	)	$	(6,608,000	)

Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation. (For accounts where multiple consolidation entries are required,combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.)

CASEY CORPORATION AND CONSOLIDATED SUBSIDIARY KENNEDY
Worksheet for a Consolidated Balance Sheet
January 1, 2021
Adjust. & Elim.
Casey
Kennedy
Debit
Credit
Consolidated
Cash
480,000 $ 166,500
295.000
126.500
Accounts receivable
Inventory
Investment in Kennedy
Buildings (net)
1,420.000
1,490.000
3.210,000
5,992.500
2,580.000
Licensing agreements
3,440.000
Goodal
240,500
$ 12,842.000 $ 6,608.000
$ (372.000)
(3470.000)
(3.000.000)
Total assets
Accounts payable
Long-erm debt
Common stock
(438,000)
(3,570,000)
(1,000,000)
Additional paidin capital
(500,000)
Retained eamings
(6,000.000)
S(12,842.000) S (6,608,000) S
(1,100,000)
Total labilities and equities

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