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Kaplan AC 450 Unit 2 Problem 2-24

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Question;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: BookValues FairValues 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.)

 

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