Kaplan AC 450 Unit 2 Problem 2-24

Problem 2-24 [LO4, LO5, LO7, LO8]
Pratt Company acquired all of Spider, Inc.’s outstanding shares on December 31, 2013, for $478,050 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:
  
  Book
Values Fair
Values
  Computer software $ 49,500     $ 88,500   
  Equipment   55,500       36,400   
  Client contracts   0       105,000   
  In-process research and development   0       29,750   
  Notes payable   (104,000)      (112,850)  
 
At December 31, 2013, the following financial information is available for consolidation:

 
  Pratt   Spider
  Cash $ 15,500     $ 19,200 
  Receivables   117,000       57,900 
  Inventory   165,000       103,900 
  Investment in Spider   478,050       0 
  Computer software   250,000       49,500 
  Buildings (net)   600,500       172,500 
  Equipment (net)   319,000       55,500 
  Client contracts   0       0 
  Goodwill   0       0 
  
     Total assets $ 1,945,050     $ 458,500
  Accounts payable $ (96,300)    $ (65,500)
  Notes payable   (530,750)      (104,000)
  Common stock   (380,000)      (100,000)
  Additional paid-in capital   (170,000)      (25,000)
  Retained earnings   (768,000)      (164,000)
     Total liabilities and equities $ (1,945,050)    $ (458,500)

Note: Parentheses indicate a credit balance.
 
Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2013. (Input all amounts as positive values.)