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: Book Values Fair Values
Computer software $20,000 $70,000
Equipment 40,000 30,000
Client contracts 0 100,000
In-process research and development 0 40,000
Notes payable (60,000) (65,000)
At December 31, 2018, the following financial information is available for consolidation:
Pratt Spider
Cash $36,000 $18,000
Receivables 116,000 52,000
Inventory 140,000 90,000
Investment in Spider 495,000 0
Computer software 210,000 20,000
Buildings (net) 595,000 130,000
Equipment (net) 308,000 40,000
Client contracts 0 0
Goodwill 0 0
Total assets $1,900,000 $350,000
Accounts payable $(88,000) $(25,000)
Notes payable (510,000) (60,000)
Common stock (380,000) (100,000)
Additional paid-in capital (170,000) (25,000)
Retained earnings (752,000) (140,000)
Total liabilities and equitie $(1,900,000) $(350,000)
Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2018.