Pratt Company acquired all of Spider, Inc.\'s outstanding shares on December 31,

Question

Pratt Company acquired all of Spider, Inc.'s outstanding shares on December 31, 2018, for $518,250 cash. Pratt will operate Spider as a wholly owned subsidiary with a separae legal and accounting identity. Although many of Spiders book values approximate fair values, several of its accounts have fair values that difer from book values. In addtion, Spider has internally developed assets that remain unrecorded on Its books. In derving the acquisition price, Prat assessed Spider's fair and book value differences as follows: Conputer software Equipment client contracta $ 50,000 93, 000 28,100 0 116, 800 44,000 31,000 92,200 97,600) Notes payable At December 31, 2018, the following financial Information is availabie for consolidation Pratt 6,850 114,500 129,000 518,250 252,000 556,000 354,000 29,700 79,500 93,000 Cash Receivables Inventory Investment in Spider Conputer software Buildings (net Equipment (net) Client contracts 50,000 133,500 44,000 $ 1,930,600 429,700 Total assets Accounts Notes payable Conmon stock Additional paid-in capital Retained earnings $ 92,100) $33,000) (510,500 92,200) (380,000 100,000) payable 170, 000 25,000) 179,500 778,000 Tot I liabilities and equities $ (1,930, 600) 429,700) Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2018. Consolidated Balance Sheet 2018 Liabilities and Assets otal assets l liabilities and

Explanation / Answer

The Calculation of Goodwill is Shown below Fair value of consideration transferred 518250 less: Book Value -304500 excess of fair value over book value 213750 less: allocation of excess fair value to specific Assets & laibilities Computer software 50000 Equipment -15900 client contracts 116800 in process research and development 31000 notes payable -5400 176500 GOODWILL 37250 PRATT COMPANY AND SUBSIDIARY CONSOLIDATED BALANCE SHEET Assets Laibilities & stockholder's equity Cash (6850+29700) 36550 laibilities Receivable(114500+79500) 194000 accounts payable 125100 inventory(129000+93000) 222000 notes payable 608100 computer software(252000+50000+50000) 352000 total laibilities 733200 building net (556000+133500) 689500 equipment net (354000+44000-15900) 382100 stockholder's equity client contracts 116800 common stock 380000 research and development 31000 additional paid in capital 170000 goodwill 37250 retained earning 778000 total stockholder's equity 1328000 total assets 2061200 total laibilities and stockholder's equity 2061200

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