Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation.
Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2021, Casey Corporation exchanged $3,327,000 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)
Carrying amount acquired
Excess fair value
to buildings (undervalued)
to licensing agreements
(overvalued)
to goodwill (indefinite life)
Accounts
Cash
Accounts receivable
Inventory
Investment in Kennedy
Buildings (net)
Licensing agreements
Goodwill
Total assets
Accounts payable
Long-term debt
Common stock
Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets
from their separate financial records (credit balances in parentheses).
Additional paid-in
capital
Retained earnings
Total liabilities and
equities
Cash
Accounts receivable
Inventory
Investment in Kennedy
Buildings (net)
Licensing agreements
Goodwill
Total assets
Accounts payable
Long-term debt
Common stock
Additional paid-in capital
Retained earnings
$
Total liabilities and
equities
$ 351,000
1,450,000
1,335,000
Casey
456,000 $
3,327,000
6,060,000
$
(104,000)
0
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.)
$3,327,000
2,600,000
$ 727,000
CASEY CORPORATION AND CONSOLIDATED SUBSIDIARY KENNEDY
Worksheet for a Consolidated Balance Sheet
January 1, 2021
247,000
$ 480,000
0
259,000
$ 12,887,000 $ 6,522,000
$
(377,000) $ (462,000)
(3,510,000) (3,460,000)
(3,000,000) (1,000,000)
Casey Kennedy
$ 456,000 $ 136,500
1,450,000 321,000
1,335,000 884,500
3,327,000
6,060,000 2,150,000
3,030,000
Kennedy
136,500
321,000
884,500
0
259,000
$
12,887,000 6,522,000
$ (377,000) (462,000)
(3,510,000) (3,460,000)
(3,000,000) (1,000,000)
(500,000)
(6,000,000) (1,100,000)
$
$
(12,887,000) (6,522,000)
2,150,000
3,030,000
(500,000)
(6,000,000)
(1,100,000)
$(12,887,000) $(6,522,000)
0
$
Adjust. & Elim.
Debit
Credit
0 $
Consolidated
$
0 $
0
0
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