3 Pratt Company acquired all of the outstanding shares of Spider, Incorporated, on December 31, 2024, for $510,100 cash. Pratt willoperate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider's book valuesapproximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internallydeveloped assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider's fair and book valuedifferences as follows:Computer softwareEquipmentclient contractsIn-process research and developmentNotes payableCash00(103,000)At December 31, 2024, the following financial information is available for consolidation (credit balances in parentheses):Total assetsAccounts payableItemsReceivablesInventoryInvestment in SpiderComputer softwareBuildings (net)Equipment (net)client contractsGoodwillNotes payableCommon stockItemsAdditional paid-in capitalRetained earningsTotal liabilities and equitiesCashTotal assetsAssetsReceivablesInventoryInvestment in SpiderComputer softwareBuildings (net)Equipment (net)Client contractsResearch and development assetGoodwillBook Values$ 24,00052,500Pratt$ 11,350154,500167,500510,100215,500577,750316,000$00Fair Values$ 70,00037,200116,00027,000(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$ 36,00056,000107,500024,000138,00052,50000$ 414,000$ (26,000)(103,000)(100,000)(25,000)(160,000)$ (414,000)PRATT COMPANY AND SUBSIDIARYConsolidated Balance SheetDecember 31, 2024Liabilities and Owners' EquityAccounts payableNotes payableCommon stockAdditional paid-in capitalRetained earnings0 Total liabilities and equities$0

Consolidation is an activity in which financial statements of a parent and its subsidiary should be…

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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