On January 1, 2018 Casey Corporation exchanged $3,273,000 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) $3,273,000
Carrying amount acquired 2,600,000
Excess fair value $673,000
to buildings (undervalued) $338,000
to licensing agreements (overvalued) (153,000 ) 185,000
to goodwill (indefinite life) $488,000
Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records.
Accounts Casey Kennedy
Cash $485,000 $188,250
Accounts receivable 1,640,000 308,000
Inventory 1,675,000 167,750
Investment in Kennedy 3,273,000 0
Buildings (net) 6,135,000 2,230,000
Licensing agreements 0 2,850,000
Goodwill 508,000 0
Total assets $13,716,000 $5,744,000
Accounts payable $(306,000 ) $(384,000)
Long-term debt (4,410,000) (2,760,000)
Common stock (3,000,000) (1,000,000)
Additional paid-in capital 0 (500,000)
Retained earnings (6,000,000) (1,100,000)
Total liabilities and equities $ (13,716,000) $(5,744,000)
Prepare an acquisition-date consolidated balance sheet for Casey Corporation and its subsidiary Kennedy Corporation.