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 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	$	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)

Answer 1

			Adjustments	Consolidated figure
Cash	8,950	18,400		27,350
Receivables	103,500	87,000		190,500
Inventory	152,500	86,000		238,500
Investment in Spider	507,950	-	(507,950)	-
Computer software	227,000	29,000	49,600	305,600
Buildings (net)	604,750	130,500		735,250
Equipment (net)	358,000	55,800	(15,100)	398,700
R&D			30,500	30,500
Client contracts	-	-	114,000	114,000
Goodwill	-	-	48,200	48,200
Total assets	1,962,650	406,700		2,088,600
Accounts payable	90,400	44,000		134,400
Notes payable	514,250	72,900	9,050	596,200
Common stock	380,000	100,000	(100,000)	380,000
Additional paid-in capital	170,000	25,000	(25,000)	170,000
Retained earnings	808,000	164,800	(164,800)	808,000
Total liabilities and equities	1,962,650	406,700		2,088,600

Net assets	459,750
Cash paid	507950
Goodwill	48,200