On January 1, 2018 Casey Corporation exchanged $3,282,000 cashfor 100 percent of the outstanding voting stock of KennedyCorporation. Casey plans to maintain Kennedy as a wholly ownedsubsidiary with separate legal status and accounting informationsystems.
At the acquisition date, Casey prepared the following fair-valueallocation 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 (indefinitelife) | | | | | $ | 457,000 | |
|
Immediately after closing the transaction, Casey and Kennedyprepared the following postacquisition balance sheets from theirseparate 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 andequities | $ | (12,799,000 | ) | | $ | (6,379,000 | ) |
|
Prepare an acquisition-date consolidated balance sheet for CaseyCorporation and its subsidiary Kennedy Corporation.(Negative amounts should be indicated by a minussign.)
