Pratt Company acquired all of Spider, Inc.’s outstanding shares on December 31, 2011, for $495,000 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:

Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2011.

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Computer software Equipment Client contracts In-process research and development Notes payable Book Values $ 20,000 Fair Values 40,000 ---0- ---0- (60,000) $ 70,000 30,000 100,000 40,000 (65,000)