Question
Pratt Company acquired all of Spider, Inc.s outstanding shares on December 31, 2018, for $507,950 cash. Pratt will operate Spider as a wholly owned subsidiary
Pratt Company acquired all of Spider, Inc.s outstanding shares on December 31, 2018, for $507,950 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spiders 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 Spiders fair and book value differences as follows:
Book Values | Fair Values | ||||||
Computer software | $ | 29,000 | $ | 78,600 | |||
Equipment | 55,800 | 40,700 | |||||
Client contracts | 0 | 114,000 | |||||
In-process research and development | 0 | 30,500 | |||||
Notes payable | (72,900 | ) | (81,950 | ) | |||
At December 31, 2018, the following financial information is available for consolidation:
Pratt | Spider | ||||||
Cash | $ | 8,950 | $ | 18,400 | |||
Receivables | 103,500 | 87,000 | |||||
Inventory | 152,500 | 86,000 | |||||
Investment in Spider | 507,950 | 0 | |||||
Computer software | 227,000 | 29,000 | |||||
Buildings (net) | 604,750 | 130,500 | |||||
Equipment (net) | 358,000 | 55,800 | |||||
Client contracts | 0 | 0 | |||||
Goodwill | 0 | 0 | |||||
Total assets | $ | 1,962,650 | $ | 406,700 | |||
Accounts payable | $ | (90,400 | ) | $ | (44,000 | ) | |
Notes payable | (514,250 | ) | (72,900 | ) | |||
Common stock | (380,000 | ) | (100,000 | ) | |||
Additional paid-in capital | (170,000 | ) | (25,000 | ) | |||
Retained earnings | (808,000 | ) | (164,800 | ) | |||
Total liabilities and equities | $ | (1,962,650 | ) | $ | (406,700 | ) | |
Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2018.
Below is what I have so far, please complete the answer. Please finish the problem and correct the mistake.
Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2018 X Answer is complete but not entirely correct. Assets Cash Receivables Inventory Research and development asset Computer software Buildings (net) Equipment (net) Client contracts Goodwill PRATT COMPANY AND SUBSIDIARY Consolidated Balance Sheet December 31, 2018 Liabilities and Stockholders' Equity $ 27,350 Accounts payable $ (134,400) 190,500 Notes payable (596,200) 238,500 Common stock (380,000) 30,500 Additional paid-in capital (170,000) 305,600 Retained earnings (972,800) 735,250 398,700 114,000 213,000 Total assets $ 2,253,400 Total liabilities and equities (2,253,400)Step by Step Solution
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