Question

Saved Problem 2-28 (Algo) (LO 2-4, 2-7) On January 1, 2021, Casey Corporation exchanged $3,282,000 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) 3.282.000 Carrying out acquired 2. 600,000 Excela fair value 682.000 to buildings undervalued) 353,000 to licensing agreements Covervalued) (128, 000) 225.000 to coodwill indefinite life) 457.000 Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses). Casey 441.000 1. 255,000 1. 270.000 3.282.000 5.597,500 Accounts Cash Accounts receivable Innentory Inwestnent in Kennedy Buildings (net) Licensing agreements Goodwill Total art Accounts payable Long-term debt Cannon stock Additional paidan capital Retained eaming Total liabilities and equities Kennedy 174,000 323,000 992.000 0 1.880,000 3.010,000 0 6.379.000 (399.000) (3.380.000) (1.000.000) (500.000) I. IOD, 000) (6.379.000) $ $ 963.500 12.799.000 (329.000) (3.470,000) 03.000.000) $ $ (6.000.0002 (12.799.000) $

Answer 1

Consolidated Balance Sheet
			Adjust & Elim.
Accounts	Casey	Kennedy	Debit	Credit	Consolidated
Cash	441,000	174,000			615,000
Accounts Receivable	1,255,000	323,000			1,578,000
Inventory	1,270,000	992,000			2,262,000
Investment in Kennedy	3,282,000	-		3,282,000	-
Buildings (net)	5,587,500	1,880,000	353,000		7,820,500
Licensing agreements	-	3,010,000		128,000	2,882,000
Goodwill	963,500	-	457,000		1,420,500
Total assets	12,799,000	6,379,000	810,000	3,410,000	16,578,000
Accounts payable	(329,000)	(399,000)			(728,000)
Long-term debt	(3,470,000)	(3,380,000)			(6,850,000)
Common Stock	(3,000,000)	(1,000,000)	1,000,000		(3,000,000)
Additional paid-in capital	-	(500,000)	500,000		-
Retained earnings	(6,000,000)	(1,100,000)	1,100,000		(6,000,000)
Total liabilities and equities	(12,799,000)	(6,379,000)	2,600,000	-	(16,578,000)

NOTES:
1. The account balances for cash, accounts receivables, inventory, accounts payable have been added to arrive the consolidated totals.
2. The investment in Kennedy is $0 because distributed carrying amount acquired for $2600000 & excess fair value of $682000
3. The balances of common stock, additional paid in capital & retained earnings stands as balance of parent company only.