Required: Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation. Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.

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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Problem 2-28 (Algo) (LO 2-4, 2-7)
On January 1, 2024, Casey Corporation exchanged $3,327,000 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)
Carrying amount acquired
Excess fair value
to buildings (undervalued)
to licensing agreements (overvalued)
to goodwill (indefinite life)
Cash
Accounts receivable
Inventory
Investment in Kennedy
Buildings (net)
Licensing agreements
Goodwill
Total assets
Accounts payable
Long-term debt
Common stock
Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their
separate financial records (credit balances in parentheses).
Accounts
Additional paid-in capital
Retained earnings
Total liabilities and equities
Cash
Accounts receivable
Inventory
Investment in Kennedy
Buildings (net)
Licensing agreements
Goodwill
Total assets
Accounts payable
Long-term debt
Common stock
Additional paid-in capital
Retained earnings
Total liabilities and equities
$
Casey
$
$
$ 456,000
1,450,000
1,335,000
3,327,000
6,060,000
Casey
259,000
$ 12,887,000
$ (377,000)
(3,510,000)
(3,000,000)
Required:
Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation.
Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this
amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the
credit column of the worksheet. Input all amounts as positive values.
456,000 $
8
$ 6,522,000
$ (462,000)
(3,460,000)
(1,000,000)
(500,000)
(6,000,000)
(1,100,000)
$ (12,887,000) $ (6,522,000)
1,450,000
1,335,000
3,327,000
6,060,000
259,000
12,887,000 $
(377,000) S
(3,510,000)
(3,000,000)
$ 351,000
(104,000)
8
CASEY CORPORATION AND CONSOLIDATED SUBSIDIARY KENNEDY
Worksheet for a Consolidated Balance Sheet
January 1, 2024
(6,000,000)
$ (12,887,000)
Kennedy
$ 136,500
321,000
884,500
Kennedy
2,150,000
3,030,000
$ 3,327,000
2,600,000
$ 727,000
136,500
321,000
884,500
247,000
$ 480,000
2,150,000
3,030,000
6,522,000
(462,000)
(3,460,000)
(1,000,000)
(500,000)
.100,000)
$ (6.522,000) $
Adjustment and Elimination
Credit
Debit
0 $
Consolidated
$
0 $
Transcribed Image Text:Problem 2-28 (Algo) (LO 2-4, 2-7) On January 1, 2024, Casey Corporation exchanged $3,327,000 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) Carrying amount acquired Excess fair value to buildings (undervalued) to licensing agreements (overvalued) to goodwill (indefinite life) Cash Accounts receivable Inventory Investment in Kennedy Buildings (net) Licensing agreements Goodwill Total assets Accounts payable Long-term debt Common stock Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses). Accounts Additional paid-in capital Retained earnings Total liabilities and equities Cash Accounts receivable Inventory Investment in Kennedy Buildings (net) Licensing agreements Goodwill Total assets Accounts payable Long-term debt Common stock Additional paid-in capital Retained earnings Total liabilities and equities $ Casey $ $ $ 456,000 1,450,000 1,335,000 3,327,000 6,060,000 Casey 259,000 $ 12,887,000 $ (377,000) (3,510,000) (3,000,000) Required: Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation. Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values. 456,000 $ 8 $ 6,522,000 $ (462,000) (3,460,000) (1,000,000) (500,000) (6,000,000) (1,100,000) $ (12,887,000) $ (6,522,000) 1,450,000 1,335,000 3,327,000 6,060,000 259,000 12,887,000 $ (377,000) S (3,510,000) (3,000,000) $ 351,000 (104,000) 8 CASEY CORPORATION AND CONSOLIDATED SUBSIDIARY KENNEDY Worksheet for a Consolidated Balance Sheet January 1, 2024 (6,000,000) $ (12,887,000) Kennedy $ 136,500 321,000 884,500 Kennedy 2,150,000 3,030,000 $ 3,327,000 2,600,000 $ 727,000 136,500 321,000 884,500 247,000 $ 480,000 2,150,000 3,030,000 6,522,000 (462,000) (3,460,000) (1,000,000) (500,000) .100,000) $ (6.522,000) $ Adjustment and Elimination Credit Debit 0 $ Consolidated $ 0 $
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