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Fair value of Kennedy (consideration transferred). Carrying amount acquired.. Excess fair value ....... to buildings (undervalued)... to licensing agreements (overvalued) to goodwill (indefinite life) .. $3,300,000 2,600,000 $ 700,000 $ 382,000 274,000 (108,000) $ 426,000 Accounts Casey Kennedy $ 172,500 347,000 263,500 Cash 457,000 1,655,000 1,310,000 3,300,000 6,315,000 -0- Accounts receivable. Inventory.. Investment in Kennedy Buildings (net) .... Licensing agreements Goodwill .. -0- 2,090,000 3,070,000 -0- 347,000 $ 13,384,000 $ (394,000) (3,990,000) (3,000,000) $ 5,943,000 $ (393,000) (2,950,000) (1,000,000) (500,000) (1,100,000) $ (5,943,000) Total assets . Accounts payable . Long-term debt . Common stock Additional paid-in capital. Retained earnings..... Total liabilities and equities.. (6,000,000) $ (13,384,000)

Fair value of Kennedy (consideration transferred). Carrying amount acquired.. Excess fair value ....... to buildings (undervalued)... to licensing agreements (overvalued) to goodwill (indefinite life) .. $3,300,000 2,600,000 $ 700,000 $ 382,000 274,000 (108,000) $ 426,000 Accounts Casey Kennedy $ 172,500 347,000 263,500 Cash 457,000 1,655,000 1,310,000 3,300,000 6,315,000 -0- Accounts receivable. Inventory.. Investment in Kennedy Buildings (net) .... Licensing agreements Goodwill .. -0- 2,090,000 3,070,000 -0- 347,000 $ 13,384,000 $ (394,000) (3,990,000) (3,000,000) $ 5,943,000 $ (393,000) (2,950,000) (1,000,000) (500,000) (1,100,000) $ (5,943,000) Total assets . Accounts payable . Long-term debt . Common stock Additional paid-in capital. Retained earnings..... Total liabilities and equities.. (6,000,000) $ (13,384,000)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2018 Casey Corporation exchanged $3,300,000 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:
Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records.
Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation.

Fair value of Kennedy (consideration transferred). Carrying amount acquired.. Excess fair value ....... to buildings (undervalued)... to licensing agreements (overvalued) to goodwill (indefinite life) .. $3,300,000 2,600,000 $ 700,000 $ 382,000 274,000 (108,000) $ 426,000
Transcribed Image Text:Fair value of Kennedy (consideration transferred). Carrying amount acquired.. Excess fair value ....... to buildings (undervalued)... to licensing agreements (overvalued) to goodwill (indefinite life) .. $3,300,000 2,600,000 $ 700,000 $ 382,000 274,000 (108,000) $ 426,000
Accounts Casey Kennedy $ 172,500 347,000 263,500 Cash 457,000 1,655,000 1,310,000 3,300,000 6,315,000 -0- Accounts receivable. Inventory.. Investment in Kennedy Buildings (net) .... Licensing agreements Goodwill .. -0- 2,090,000 3,070,000 -0- 347,000 $ 13,384,000 $ (394,000) (3,990,000) (3,000,000) $ 5,943,000 $ (393,000) (2,950,000) (1,000,000) (500,000) (1,100,000) $ (5,943,000) Total assets . Accounts payable . Long-term debt . Common stock Additional paid-in capital. Retained earnings..... Total liabilities and equities.. (6,000,000) $ (13,384,000)
Transcribed Image Text:Accounts Casey Kennedy $ 172,500 347,000 263,500 Cash 457,000 1,655,000 1,310,000 3,300,000 6,315,000 -0- Accounts receivable. Inventory.. Investment in Kennedy Buildings (net) .... Licensing agreements Goodwill .. -0- 2,090,000 3,070,000 -0- 347,000 $ 13,384,000 $ (394,000) (3,990,000) (3,000,000) $ 5,943,000 $ (393,000) (2,950,000) (1,000,000) (500,000) (1,100,000) $ (5,943,000) Total assets . Accounts payable . Long-term debt . Common stock Additional paid-in capital. Retained earnings..... Total liabilities and equities.. (6,000,000) $ (13,384,000)
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