n January 1, 2018 Casey Corporation exchanged s3 300000 cash for 100 percent of

Question

n January 1, 2018 Casey Corporation exchanged s3 300000 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 systems. At the acquisition date, Casey prepared the following fair-value allocation schedule: ed Fair value of Kennedy (consideration transferred) Carrying amount acquired Excess fair value 3, 300, 000 2, 600, 000 $ 700, 000 to buildings (undervalued) to licensing agreements (overvalued) to goodwill (indefinite life) S 382,000 (108,000) 74,000 S 426, 000 Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records. nned Cash Accounts receivable Inventory Investment in Kennedy Buildings (net) Licensing agreements Goodwi11 457,000 1, 655, 000 1, 310, 000 3, 300,000 6, 315,000 172,500 347,000 263, 500 2,090,000 3, 070, 000 347,000 Total assets Accounts payable Long-term debt Common stock Additional paid-in capital Retained earninga s 23,384, 000S 5,943,000 (394000)(393,000) (3, 990, 000)2, 950,000) (3, 000, 000)(1, 000, 000) abiiitses and equities000.00300.0 (13, 384, 000) S.943, 000) 6,000.900 100. Total 1iabilities and equities Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation. (Negative amounts should be indicated by a minus sign.) We CASEY CORPORATION AND CONSOLIDATED SUBSIDIARY KENNEDY

Explanation / Answer

CASEY CORPORATION AND CONSOLIDATED SUBSIDIARY KENNEDY CONSOLIDATED BALANCE SHEET JANUARY 1 2018 Assets Liabilities and Stockholders Equity Cash 629500 Accounts Payable 787000 Accounts Receivable 2002000 Long-Term debt 6940000 Inventory 1573500 Common Stock 3000000 Buildings (net) 8787000 Retained Earnings 6000000 Licensing agreements 2962000 Goodwill 773000 Total Assets 16727000 Total Liabilities and equities 16727000 Cash 457000+172500 629500 Accounts Receivable 1655000+347000 2002000 Inventory 1310000+263500 1573500 Buildings (net) 6315000+2090000+382000 8787000 Licensing agreements 3070000-108000 2962000 Goodwill 426000+347000 773000 Accounts payable 394000+393000 787000 Long-Term debt 3990000+2950000 6940000

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