Note: Parentheses indicate a credit balance.

Pepper Company acquired all of Salt Corporation’s outstanding shares on December

    31, 2017 for $750,000 cash.  Pepper will operate Salt as a wholly owned

    subsidiary with a separate legal and accounting identity.  Although many of Salt’s

    book values approximate fair values, several of its accounts have a fair values that

    differ from book values.  In addition, Salt has internally developed assets that remain

    unrecorded on its books.  In deriving the acquisition price, Pepper assessed Salt’s

    fair and book value differences as follows:

Required:  Complete the consolidation worksheet for Pepper and Salt at December 31, 2017.

Problem 3 Consolidation Worksheet

Use entry reference letters (S, A)

On January 1, 20x1, Perdrillo Company acquired a new drilling machine costing $10,000. Estimated useful life of five years or 36,000 drilling operations and estimated salvage value of $1,000.

1. REQUIRED:  Encircle the one correct answer for each of the following:

Show all supporting calculations or no credit.

1. Using straight-line depreciation, 20x1 depreciation expense is:

a. $2,000 b. $7,200 c. $1,800 d. $900 e. None of these.

2. Using units-of-production depreciation and that 8,000 drilling operations were made during 20x1, depreciation expense for 20x1 is:

a. $1,750 b. $1,944 c. $2,000 d. $ 1,800 e. None of th

3. Using declining balance depreciation, depreciation expense for 20x3 is:

a. $3,600 b. $2,000 c. $1,920 d. $1,440 e. None of these.

4. The machine was sold for $2,700 cash at a time when its accumulated depreciation was $8,300. The resulting gain or loss on disposal is:

a. $300 gain b. $1,700 loss c. $1,000 gain d. $2,700 loss

e. None of these

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:

At December 31, 2018, the following financial information is available for consolidation:

Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2018.

Pratt Company acquired all of Spider, Inc.’s outstanding shares on December 31, 2015, 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, 2015, the following financial information is available for consolidation:

Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2015.

Pratt Company acquired all of Spider, Inc.’s outstanding shares on December 31, 2018, for $484,450 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, 2018, the following financial information is available for consolidation:

Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2018.

Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2018.

Please show calculations, thanks.

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:

At December 31, 2018, the following financial information is available for consolidation:

Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2018.

Pratt Company acquired all of Spider, Inc.’s outstanding shares on December 31, 2018, for $499,450 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, 2018, the following financial information is available for consolidation:

Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2018.

Pratt Company acquired all of Spider, Inc.’s outstanding shares on December 31, 2018, 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: Book Values Fair Values 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, 2018, 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 ) Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2018.