Question

On January 1, 2018 Casey Corporation exchanged $3,282,000 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)					$	3,282,000
Carrying amount acquired						2,600,000
Excess fair value					$	682,000
to buildings (undervalued)	$	353,000
to licensing agreements (overvalued)		(128,000	)			225,000
to goodwill (indefinite life)					$	457,000

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

Accounts	Casey				Kennedy
Cash	$	441,000			$	174,000
Accounts receivable		1,255,000				323,000
Inventory		1,270,000				992,000
Investment in Kennedy		3,282,000				0
Buildings (net)		5,587,500				1,880,000
Licensing agreements		0				3,010,000
Goodwill		963,500				0
Total assets	$	12,799,000			$	6,379,000
Accounts payable	$	(329,000	)		$	(399,000	)
Long-term debt		(3,470,000	)			(3,380,000	)
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	$	(12,799,000	)		$	(6,379,000	)

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

consolidated balancesheet as of january 2018
			figures in$	figures in$	figures in$
Assets			Company C	company K	Consolidated
Cash			441000	174000	615000
Account receviable			1255000	323000	1578000
Inventory			1270000	992000	2262000
investment in K co*			3282000	0	0	(3282000-3282000)
Building net*			5587500	1880000	7820500	(5587500+1880000+353000)
licensing agreement*			0	3010000	2882000	0+3010000-128000)
goodwill*			963500	0	1420500	(963500+457000)
total assets			12799000	6379000	16578000
Laibilities
Accounts payable			329000	399000	728000
long term Debt			3470000	3380000	6850000
Stockholders equity
common stock			3000000	1000000	3000000
Additional paid in capital			0	500000	0
retained earnings			6000000	1100000	6000000
Total laibilities & stockholders equity			12799000	6379000	16578000
Therefore the consolidated balancesheet assets & laibilities & stockholders equity is equal to $16578000
* investment = the consolidated ivestment in K will have 0 net value amount invested by co C is alsoamount received by company S
* Building = the undervalued amount of building of co K is also added for consolidated balance
* lisensing fees = the overvalued amount of licensing agreement of co k is deducted for consolidated value
goodwill= the consolidated amount of goodwill is the value for co C + the indefinite value reported for co K