Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2021, Casey Corporation exchanged $3,194,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy

image text in transcribedimage text in transcribedimage text in transcribed

On January 1, 2021, Casey Corporation exchanged $3,194,000 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) $ $ 3, 194,000 2,600,000 594,000 368,000 (182,000) 186,000 $ 408,000 Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses). $ Kennedy 127,500 378,000 125,500 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 $ 441,000 1,410,000 1,315,000 3,194,000 5,767,500 0 660,500 $ 12,788,000 $ (308,000) (3,480,000) (3,000,000) 0 (6,000,000) $ (12,788,000) 2,810,000 2,810,000 0 $ 6,251,000 $ (411,000) (3,240,000) (1,000,000) (500,000) (1,100,000) $ (6,251,000) Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation. (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.) Consolidated CASEY CORPORATION AND CONSOLIDATED SUBSIDIARY KENNEDY Worksheet for a Consolidated Balance Sheet January 1, 2021 Adjust. & Elim. Casey Kennedy Debit Credit Cash $ 441,000 $ 127,500 Accounts receivable 1,410,000 378,000 Inventory 1,315,000 125,500 Investment in Kennedy 3,194,000 Buildings (net) 5,767,500 2,810,000 Licensing agreements 2,810,000 Goodwill 660,500 Total assets $ 12,788,000 $ 6,251,000 Accounts payable $ (308,000) (411,000) Long-term debt (3,480,000) (3,240,000) Common stock (3,000,000) (1,000,000) Additional paid-in capital (500,000) Retained earnings (6,000,000) (1,100,000) Total liabilities and equities $(12,788,000) $ (6,251,000)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Smart Sexy Auditing Clerk

Authors: Funny Career Quotes

1st Edition

B08RRJ97CP, 979-8588903189

More Books

Students also viewed these Accounting questions