27. On January 1, 2018 Casey Corporation exchanged $3,300,000 cash for 100 percent of the outstand- ing 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)......... $3,300,000 2,600,000 $ 700.000 $ 382,000 (108,000) 274,000 $ 426,000 Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisi- tion balance sheets from their separate financial records, Accounts 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 $ 457.000 1,655,000 1,310,000 3,300,000 6,315.000 -0- 347,000 $ 13,384,000 $ (394,000) (3,990,000) (3,000,000) -0- (6,000,000) $(13,384,000) Kennedy $ 172,500 347,000 263,500 -0- 2,090,000 3,070,000 -0- $ 5,943,000 $ (393,000) (2,950,000) (1,000,000) (500,000) (1,100,000) $ (5,943,000) 27. On January 1, 2018 Casey Corporation exchanged $3,300,000 cash for 100 percent of the outstand- ing 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)......... $3,300,000 2,600,000 $ 700.000 $ 382,000 (108,000) 274,000 $ 426,000 Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisi- tion balance sheets from their separate financial records, Accounts 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 $ 457.000 1,655,000 1,310,000 3,300,000 6,315.000 -0- 347,000 $ 13,384,000 $ (394,000) (3,990,000) (3,000,000) -0- (6,000,000) $(13,384,000) Kennedy $ 172,500 347,000 263,500 -0- 2,090,000 3,070,000 -0- $ 5,943,000 $ (393,000) (2,950,000) (1,000,000) (500,000) (1,100,000) $ (5,943,000)
