On January 1, 2018 Casey Corporation exchanged $3,258,000 cash for 100 percent o
ID: 2340730 • Letter: O
Question
On January 1, 2018 Casey Corporation exchanged $3,258,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsid ary wth separate legal status and accounting Information systems At the acqu sition date, Casey prepared the following fair-value allocation schedule: Fair value of Kennedy consideration transferred) Carrying amount acquired Excess fair value $3,258,000 2, 600,000 $ 658,000 to buildings (undervalued) to licensing agreements (overvalued) to goodwill (indefinite life) $ 358,000 135,000) 223,000 435,000 Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records Cascy Cash Accounts receivable Inventory Investment in Kennedy Buildings (net 1,275,000 1,705,000 3,258,000 5,857,500 433,000 142,500 311,000 246,500 2,340,000 3,370, 000 Goodwi11 256,500 $ 12,785,000 6,410, 000 Total assets Accounts Long-term debt Cormon stock Additional paid-in capital Retained earnings $395,000) (470,000) (3, 390,000) (3,340, 000) (3,000,000) (1,000, 000) (500, 000) payable 6,000,000) (1,100.0 $(12,785,000) (6,410, 000) Tot I liabilities and equities Prepare an acquistion-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation. Negative amounts should be indicated by a minus sign.) KENNEDY Consolidated Balance Sheet 2018 Liabilities and Stockholders Assets Total liabilities and Total assets uitiesExplanation / Answer
First we would prepare the worksheet of consolidation and that we can prepare the consolidated balance sheet Casey Kennedy Adjustments Consolidated Cash 433,000 142,500 Debit Credit 575,500 Accounts receivable 1,275,000 311,000 1,586,000 Inventory 1,705,000 246,500 1,951,500 Investment in Kennedy 3,258,000 0 3285000 0 Buildings (net) 5,857,500 2,340,000 358000 8,555,500 Licensing agreements 0 3,370,000 135000 3,235,000 Goodwill 256,500 435000 691,500 Total assets 12,785,000 6,410,000 16,595,000 Accounts payable 395,000 470,000 865,000 Long-term debt 3,390,000 3,340,000 6,730,000 Common stock 3,000,000 1,000,000 1000000 3,000,000 Additional paid-in cap. 0 500,000 500000 0 Retained earnings 6,000,000 1,100,000 1100000 6,000,000 Total liab. & equities 12,785,000 6,410,000 3393000 3420000 16,595,000 CASEY CORPORATION AND CONSOLIDATED SUBSIDIARY KENNEDY Consolidated Balance Sheet 1-Jan-18 Assets Liabilities and Stockholders Equity Cash $575,500 Accounts payable $865,000 Accounts receivable $1,586,000 Inventory $1,951,500 Long term debt $6,730,000 Total Current Assets $4,113,000 Total Liabilities $7,595,000 Fixed Assets, net 8,555,500 Stockholders Equity Intangibles Common Stock $3,000,000 Licensing agreements $3,235,000 Retained Earnings $6,000,000 Goodwill $691,500 Total $3,926,500 Total Stockholders Equity $9,000,000 Total Assets $16,595,000 Total Liabilities and Stockholders Equity $16,595,000