Student Name:

Problem 2-25

Casey KENNEDY

CASH 457000 172500

ACCOUNTS RECEIVABLE 1655000 347000

INVENTORY 1310000 263500

INVESTENT IN KENNEDY 3300000 0

BUILDINGS (NET) 6315000 2090000

LICENSING AGREEMENTS 0 3070000

GOODWILL 347000 0

TOTAL ASSETS 13384000 5943000

ACCOUNTS PAYABLE 394000 393000

LONG-TERM DEBT 3990000 2950000

COMMON STOCK 3000000 1000000

ADDITIONAL PAID IN CAPITAL 0 500000

RETAINED EARNINGS 6000000 1100000

TOTAL LIABILITIES PLUS EQUITY 13384000 5943000

consolidated

629500 CORRECT

2002000 CORRECT

1573500 CORRECT

0 CORRECT

$8,787,000 CORRECT

$2,962,000 CORRECT

$773,000 CORRECT

16727000 CORRECT

787000 CORRECT

6940000 CORRECT

3000000 CORRECT

0 CORRECT

6000000 CORRECT

16727000 CORRECT
On January 1, 2015 Casey Corporation exchanged $3,300,000 cash for 100% of
of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned su
legal status and accounting information system.

At the acquisition date, Casey prepared the following fair-value allocation sched

Fair value of Kennedy (cash price paid)

Book value of Kennedy equity
Excess fair value

to building (undervalued) $382,000

to license (overvalued) $108,000
to goodwill $426,000

Immediately after closing the transaction, Casey and Kennedy prepared the follo
post-acquisition balance sheets from their separate financial records

CASEY KENNEDY
CASH 457000 172500
ACCOUNTS RECEIVABLE 1655000 347000
INVENTORY 1310000 263500
INVESTENT IN KENNEDY 3300000 0
BUILDINGS (NET) 6315000 2090000
LICENSING AGREEMENTS 0 3070000
GOODWILL 347000 0
TOTAL ASSETS 13384000 5943000

ACCOUNTS PAYABLE 394000 393000

LONG-TERM DEBT 3990000 2950000
COMMON STOCK 3000000 1000000
ADDITIONAL PAID IN CAPITAL 0 500000
RETAINED EARNINGS 6000000 1100000
TOTAL LIABILITIES PLUS EQUITY 13384000 5943000

REQUIRED:
Prepare a January 1, 2015 consolidated balance sheet for Casey Co
its subsidiary Kennedy Corporation.
0 cash for 100% of the outstanding voting stock
s a wholly owned subsidiary with separate

ue allocation schedule:

$3,300,000
$2,600,000
$700,000

dy prepared the following

records

e sheet for Casey Corporation and