Question

On January 1, 2018 Casey Corporation exchanged $3,244,000 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)					$	3,244,000
Carrying amount acquired						2,600,000
Excess fair value					$	644,000
to buildings (undervalued)	$	366,000
to licensing agreements (overvalued)		(196,000	)			170,000
to goodwill (indefinite life)					$	474,000

Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records.

Accounts	Casey				Kennedy
Cash	$	524,000			$	192,000
Accounts receivable		1,455,000				334,000
Inventory		1,500,000				286,000
Investment in Kennedy		3,244,000				0
Buildings (net)		5,572,500				1,870,000
Licensing agreements		0				3,000,000
Goodwill		531,500				0
Total assets	$	12,827,000			$	5,682,000
Accounts payable	$	(387,000	)		$	(382,000	)
Long-term debt		(3,440,000	)			(2,700,000	)
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	$	(12,827,000	)		$	(5,682,000	)

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

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Accounts	Casey	Kennedy	Adjustment and Elimination				Consolidated
Cash	$               524,000	$             192,000					$            716,000
Accounts receivable	$            1,455,000	$             334,000					$         1,789,000
Inventory	$            1,500,000	$             286,000					$         1,786,000
Investment in Kennedy	$            3,244,000	$                       -			S	$      2,600,000	$                      -
					A	$         644,000
Buildings (net)	$            5,572,500	$          1,870,000	A	$        366,000			$         7,808,500
Licensing agreements	$                         -	$          3,000,000			A	$         196,000	$         2,804,000
Goodwill	$               531,500	$                       -	A	$        474,000			$         1,005,500
Total assets	$          12,827,000	$          5,682,000					$      15,909,000
Accounts payable	$              -387,000	$           -382,000					$          -769,000
Long-term debt	$          -3,440,000	$        -2,700,000					$       -6,140,000
Common stock	$          -3,000,000	$        -1,000,000	S	$     1,000,000			$       -3,000,000
Additional paid-in capital	$                         -	$           -500,000	S	$        500,000			$                      -
Retained earnings	$          -6,000,000	$        -1,100,000	S	$     1,100,000			$       -6,000,000
Total liabilities and equities	$        -12,827,000	$        -5,682,000					$     -15,909,000