P 2-29 in textbook. Pratt Company acquired all of Spider, Inc.'s outstanding shares on December 31,...
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P 2-29 in textbook. Pratt Company acquired all of Spider, Inc.'s outstanding shares on December 31, 2018, 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: Computer software Equipment Client contracts In-process research and development Notes payable Cash Receivables Inventory Investment in Spider Computer software At December 31, 2018, the following financial information is available for consolidation: Buildings (net) Equipment (net) Client contracts In-Process R&D Goodwill Total Assets Book Values $ 20,000 40,000 -0- Accounts payable Notes payable Common Stock Additional paid-in capital Retained earnings Total liabilities and equities (60,000) Pratt $36,000 116,000 140,000 495,000 210,000 595,000 308,000 -0- -0- -0- 1,900,000 (88,000) (510,000) (380,000) (170,000) (752,000) (1,900,000) Fair Values $70,000 30,000 100,000 40,000 (65,000) Spider $18,000 52,000 90,000 -0- 20,000 130,000 40,000 -0- -0- -0- 350,000 (25,000) (60,000) (100,000) (25,000) (140,000) (350,000) Accounts Cash 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, 12/31/18 Total liabilities and equity PRATT COMPANY AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2018 Pratt 36,000 116,000 140,000 495,000 Spider 18,000 52,000 90,000 210,000 20,000 595,000 130,000 308,000 40,000 1,900,000 (88,000) (25,000) (510,000) (60,000) (380,000) (100,000) (170,000) (25,000) (752,000) (140,000) (1,900,000) (350.000) 350,000 Consolidation Entries Consolidated Totals Assuming Spider is dissolved, list the following amounts in Pratt's balance after its acquisition of Spider. Are they the same as the totals in the consolidated balance sheet? Cash Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts In-Process R&D Goodwill Total Assets Accounts payable Notes payable Common Stock Additional paid-in capital Retained earnings Total liabilities and equities Pratt P 2-29 in textbook. Pratt Company acquired all of Spider, Inc.'s outstanding shares on December 31, 2018, 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: Computer software Equipment Client contracts In-process research and development Notes payable Cash Receivables Inventory Investment in Spider Computer software At December 31, 2018, the following financial information is available for consolidation: Buildings (net) Equipment (net) Client contracts In-Process R&D Goodwill Total Assets Book Values $ 20,000 40,000 -0- Accounts payable Notes payable Common Stock Additional paid-in capital Retained earnings Total liabilities and equities (60,000) Pratt $36,000 116,000 140,000 495,000 210,000 595,000 308,000 -0- -0- -0- 1,900,000 (88,000) (510,000) (380,000) (170,000) (752,000) (1,900,000) Fair Values $70,000 30,000 100,000 40,000 (65,000) Spider $18,000 52,000 90,000 -0- 20,000 130,000 40,000 -0- -0- -0- 350,000 (25,000) (60,000) (100,000) (25,000) (140,000) (350,000) Accounts Cash 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, 12/31/18 Total liabilities and equity PRATT COMPANY AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2018 Pratt 36,000 116,000 140,000 495,000 Spider 18,000 52,000 90,000 210,000 20,000 595,000 130,000 308,000 40,000 1,900,000 (88,000) (25,000) (510,000) (60,000) (380,000) (100,000) (170,000) (25,000) (752,000) (140,000) (1,900,000) (350.000) 350,000 Consolidation Entries Consolidated Totals Assuming Spider is dissolved, list the following amounts in Pratt's balance after its acquisition of Spider. Are they the same as the totals in the consolidated balance sheet? Cash Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts In-Process R&D Goodwill Total Assets Accounts payable Notes payable Common Stock Additional paid-in capital Retained earnings Total liabilities and equities Pratt
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Answer Purchase price and account allocation Consideration transferred at fair value 495000 Book val... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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