50.1K

Verified Solution

Link Copied!

Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $488,900 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 Book Values Fair Values $ 28.000 68.750 69.500 59,400 0 112.000 0 24.500 (72,500) (79, 000) At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses): Spider Cash Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts Goodwill Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained eaming Total liabilities and equities Pratt $ 18.700 118.500 158,000 488.900 230,000 612, 750 400.000 0 0 $ 2, 026, 850 $ (94.600) (532.250) (380.000) (170,000) (850.000) $(2.026. 850) $ 16.000 57, 500 87.000 0 28.000 136,000 68.500 0 0 $ 394.000 $ (34.000) (72.500) (100.000) (25. 000) (162.500) $ (394, 000) Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2021. Credit Consolidated Cash $ PRATT COMPANY AND SUBSIDIARY Worksheet for a Consolidated Balance Sheet December 31, 2021 Pratt Spider Debit 18.700 $ 16,000 118,500 57,500 158,000 87,000 488,900 230,000 28,000 612.750 136,000 400,000 69,500 Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts Research and development asset Goodwill Total assets Accounts payable Notes payable Common stock Additional paid.in capital Retained earnings Total liabilities and equities $ 0 $ 2,026,850 $ $ (94,600) $ (532,250) (380,000) (170,000) (850,000) $ (2.026,850) $ 394,000 (34,000) (72,500) (100,000) (25,000) (162,500) (394,000) $ 0 $ 0 lea 0

Answer & Explanation Solved by verified expert

See Answer