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Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik
Edition 10ISBN: 978-1260575910Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik
Edition 10ISBN: 978-1260575910 Exercise 52
The Acquisition Method
Pratt Company acquired all of Spider, Inc.'s outstanding shares on December 31, 2011, 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:
At December 31, 2011, the following financial information is available for consolidation:
Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2011.
Pratt Company acquired all of Spider, Inc.'s outstanding shares on December 31, 2011, 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:
At December 31, 2011, the following financial information is available for consolidation:
Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2011.
Explanation
Verified
Verified
Consolidated balance sheet:
The consoli...
Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik
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