Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $504,450 cash. Pratt will operateSpider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider's book valuesapproximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internallydeveloped assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider's fair and book valuedifferences as follows:Book Values Fair Values$ 57,000$ 97,250Computer softwareEquipmentClient contracts55,00037, 200107,50029,500(84,000)In-process research and developmentNotes payable(78,000)At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses):Spider32,40074,50081,000PrattCash2431,700147,500146,000504,450226,500569, 250311,000ReceivablesInventoryInvestment in SpiderComputer softwareBuildings (net)Equipment (net)Client contracts57,000146,50055,000GoodwillTotal assets$ 1,936,400$ 446,400Accounts payableNotes payable(94,900) $ (73,400)(524,500)(380,000)(170,000)(767,000)$(1,936,400) $ (446,400)(78,000)(100,000)(25,000)(170,000)Common stockAdditional paid-in capitalRetained earningsTotal liabilities and equitiesPrepare a consolidated balance sheet for Pratt and Spider as of December 31, 2021.

Parent Company has to consolidate the Wholly Owned Subsidiary Company from the data prevailing on…

loped assets that remain unrecorded on its books. In deriving the acquisition ences as follows: Book Values Fair Values $ 57,000 S 97,250 37,200 107,500 29,500 (84, 000) puter software ipment 55,000 ent contracts process research and development es payable (78,000) cember 31, 2021, the following financial information is available for consolid Pratt Spider h eivables entory estment in Spider nuter software 31,700 $ 32,400 147,500 146,000 504,450 74,500 81,000 226.50e 57.000

loped assets that remain unrecorded on its books. In deriving the acquisition ences as follows: Book Values Fair Values $ 57,000 S 97,250 37,200 107,500 29,500 (84, 000) puter software ipment 55,000 ent contracts process research and development es payable (78,000) cember 31, 2021, the following financial information is available for consolid Pratt Spider h eivables entory estment in Spider nuter software 31,700 $ 32,400 147,500 146,000 504,450 74,500 81,000 226.50e 57.000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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