Pratt Company acquired all of the outstanding shares of Spider, Incorporated, on December 31, 2024, for $528,900 cash. Pratt wil 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 valu differences as follows: Computer software Equipment Client contracts In-process research and development Notes payable Items Computer software Buildings (net) Equipment (net) Client contracts Goodwill Cash Receivables Inventory Investment in Spider Total assets Accounts payable (75,500) At December 31, 2024, the following financial information is available for consolidation (credit balances in parentheses): Notes payable Common stock Items Book Values $ 25,000 44,200 0 Additional paid-in capital Retained earnings Total liabilities and equities Pratt $ 15,000 105,500 160, 500 528,900 223,500 612,250 307,000 0 Fair Values $ 72,500 33,800 116,500 $ 1,952,650 $ (91,400) (552,250) (380,000) (170,000) (759,000) $ (1,952,650) 38,250 (84,450) Spider $ 19,300 70,000 70,500 0 25,000 173,500 44,200 0 0 $ 402,500 $ (34,500) (75,500) (100,000) (25,000) (167,500) $ (402, 500)
Pratt Company acquired all of the outstanding shares of Spider, Incorporated, on December 31, 2024, for $528,900 cash. Pratt wil 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 valu differences as follows: Computer software Equipment Client contracts In-process research and development Notes payable Items Computer software Buildings (net) Equipment (net) Client contracts Goodwill Cash Receivables Inventory Investment in Spider Total assets Accounts payable (75,500) At December 31, 2024, the following financial information is available for consolidation (credit balances in parentheses): Notes payable Common stock Items Book Values $ 25,000 44,200 0 Additional paid-in capital Retained earnings Total liabilities and equities Pratt $ 15,000 105,500 160, 500 528,900 223,500 612,250 307,000 0 Fair Values $ 72,500 33,800 116,500 $ 1,952,650 $ (91,400) (552,250) (380,000) (170,000) (759,000) $ (1,952,650) 38,250 (84,450) Spider $ 19,300 70,000 70,500 0 25,000 173,500 44,200 0 0 $ 402,500 $ (34,500) (75,500) (100,000) (25,000) (167,500) $ (402, 500)
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, Incorporated, on December 31, 2024, for $528,900 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
Items
Cash
Total assets
Accounts payable
Notes payable
Common stock
Items
Receivables
Inventory
Investment in Spider
Computer software
Buildings (net)
Equipment (net)
client contracts
Goodwill
(75,500)
At December 31, 2024, the following financial information is available for consolidation (credit balances in parentheses):
Book Values
$ 25,000
Additional paid-in capital
Retained earnings
Total liabilities and equities
44, 200
0
0
Pratt
$ 15,000
105,500
160, 500
528,900
223,500
612, 250
307,000
0
0
$ 1,952,650
$ (91,400)
(552,250)
(380,000)
Fair Values
$ 72,500
33,800
116,500
(170,000)
(759,000)
$ (1,952,650)
38,250
(84,450)
Spider
$ 19,300
70,000
70,500
0
25,000
173,500
44,200
0
0
$ 402,500
$ (34,500)
(75,500)
(100,000)
(25,000)
(167,500)
$ (402, 500)
Transcribed Image Text:Required:
Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2024.
Assets
Cash
Receivables
Inventory
Investment in Spider
Computer software
Buildings (net)
Equipment (net)
Client contracts
Research and development asset
Goodwill
Total assets
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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