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
icon
Related questions
Question

3

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
Expert Solution
steps

Step by step

Solved in 4 steps with 4 images

Blurred answer
Knowledge Booster
Accounting for Intangible assets
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education