Question

On January 1, 2018 Casey Corporation exchanged $3,218,000 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) $ 3,218,000 Carrying amount acquired 2,600,000 Excess fair value $ 618,000 to buildings (undervalued) $ 326,000 to licensing agreements (overvalued) (171,000 ) 155,000 to goodwill (indefinite life) $ 463,000 Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records. Accounts Casey Kennedy Cash $ 471,000 $ 188,250 Accounts receivable 1,550,000 301,000 Inventory 1,330,000 731,750 Investment in Kennedy 3,218,000 0 Buildings (net) 6,172,500 1,860,000 Licensing agreements 0 3,250,000 Goodwill 379,500 0 Total assets $ 13,121,000 $ 6,331,000 Accounts payable $ (331,000 ) $ (461,000 ) Long-term debt (3,790,000 ) (3,270,000 ) 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 $ (13,121,000 ) $ (6,331,000 ) Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation. (Negative amounts should be indicated by a minus sign.)

Answer 1