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Pratt Company acquired all of the outstanding shares of Spider, Incorporated, on December 31, 2024, for $510,100 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:

Pratt Company acquired all of the outstanding shares of Spider, Incorporated, on December 31, 2024, for $510,100 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:

FINANCIAL ACCOUNTING
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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Pratt Company acquired all of the outstanding shares of Spider, Incorporated, on December 31, 2024, for $510,100 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 0 0 (103,000) At December 31, 2024, the following financial information is available for consolidation (credit balances in parentheses): Total assets Accounts payable Items Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) client contracts Goodwill Notes payable Common stock Items Additional paid-in capital Retained earnings Total liabilities and equities Cash Total assets Assets Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts Research and development asset Goodwill Book Values $ 24,000 52,500 Pratt $ 11,350 154,500 167,500 510,100 215,500 577,750 316,000 $ 0 0 Fair Values $ 70,000 37,200 116,000 27,000 (109,350) $ 1,952,700 $ (94,200) (532,500) (380,000) (170,000) (776,000) $ (1,952,700) Required: Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2024. Spider $ 36,000 56,000 107,500 0 24,000 138,000 52,500 0 0 $ 414,000 $ (26,000) (103,000) (100,000) (25,000) (160,000) $ (414,000) PRATT COMPANY AND SUBSIDIARY Consolidated Balance Sheet December 31, 2024 Liabilities and Owners' Equity Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings 0 Total liabilities and equities $ 0
Transcribed Image Text:Pratt Company acquired all of the outstanding shares of Spider, Incorporated, on December 31, 2024, for $510,100 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 0 0 (103,000) At December 31, 2024, the following financial information is available for consolidation (credit balances in parentheses): Total assets Accounts payable Items Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) client contracts Goodwill Notes payable Common stock Items Additional paid-in capital Retained earnings Total liabilities and equities Cash Total assets Assets Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts Research and development asset Goodwill Book Values $ 24,000 52,500 Pratt $ 11,350 154,500 167,500 510,100 215,500 577,750 316,000 $ 0 0 Fair Values $ 70,000 37,200 116,000 27,000 (109,350) $ 1,952,700 $ (94,200) (532,500) (380,000) (170,000) (776,000) $ (1,952,700) Required: Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2024. Spider $ 36,000 56,000 107,500 0 24,000 138,000 52,500 0 0 $ 414,000 $ (26,000) (103,000) (100,000) (25,000) (160,000) $ (414,000) PRATT COMPANY AND SUBSIDIARY Consolidated Balance Sheet December 31, 2024 Liabilities and Owners' Equity Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings 0 Total liabilities and equities $ 0
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