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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.

FINANCIAL ACCOUNTING
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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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
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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