Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $550,200 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider's book values approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider's fair and book value differences as follows: Computer software Equipment Client contracts In-process research and development Notes payable Cash Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts will At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses): Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities Book Values Fair Values $ 26,000 $ 90,500 60,000 43,300 139,000 $ 0 0 (103,500) Pratt 9,400 $ 113,500 144,000 550, 200 242,500 601, 250 279,000 0 0 26,000 (113,100) Spider 43,000 89,000 100,000 (170,000) (775,000) 0 26,000 150,500 60,000 0 0 $ 1,939,850 $ 468,500 $ (95,100) $ (55,000) (103,500) (519,750) (380,000) (100,000) (25,000) (185,000) $(1,939,850) $ (468,500) Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2021.
Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $550,200 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider's book values approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider's fair and book value differences as follows: Computer software Equipment Client contracts In-process research and development Notes payable Cash Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts will At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses): Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities Book Values Fair Values $ 26,000 $ 90,500 60,000 43,300 139,000 $ 0 0 (103,500) Pratt 9,400 $ 113,500 144,000 550, 200 242,500 601, 250 279,000 0 0 26,000 (113,100) Spider 43,000 89,000 100,000 (170,000) (775,000) 0 26,000 150,500 60,000 0 0 $ 1,939,850 $ 468,500 $ (95,100) $ (55,000) (103,500) (519,750) (380,000) (100,000) (25,000) (185,000) $(1,939,850) $ (468,500) Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $550,200 cash. Pratt will operate
Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider's book values
approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally
developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider's fair and book value
differences as follows:
Computer software
Equipment
Client contracts
In-process research and development
Notes payable
Cash
Receivables
Inventory
Investment in Spider
Computer software
Buildings (net)
Equipment (net)
Client contracts
will
At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses):
Total assets
Accounts payable
Notes payable
Common stock
Additional paid-in capital
Retained earnings
Total liabilities and equities
Book Values Fair Values
$ 26,000 $ 90,500
60,000
43,300
139,000
$
0
0
(103,500)
Pratt
9,400 $
113,500
144,000
550, 200
242,500
601, 250
279,000
0
0
26,000
(113,100)
Spider
43,000
89,000
100,000
(170,000)
(775,000)
0
26,000
150,500
60,000
0
0
$ 1,939,850 $ 468,500
$
(95,100) $ (55,000)
(103,500)
(519,750)
(380,000) (100,000)
(25,000)
(185,000)
$(1,939,850) $ (468,500)
Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2021.
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