P02-24

Student Name:
Class:
Problem 02-24

- Purchase price and account allocation

Consideration transferred at fair value
Book value
Excess fair over book value
Allocation of excess fair value to
specific assets and liabilities
-to Computer software
-to Equipment
-to Client contracts
-to IPR&D
-to Notes payable
Goodwill

PRATT COMPANY AND SPIDER, INC.

Consolidation Worksheet
December 31, 2013

Accounts
Cash
Receivables
Inventory
Investment in Spider
Computer software
Buildings (net)
Equipment (net)
Client contracts
R & D asset
Goodwill
Total assets
Accounts payable
Notes payable
Common stock
Additional paid-in capital
Retained earnings
Total liabilities and equities

Pratt
36,000
116,000
140,000
495,000

Spicer
$
18,000
52,000
90,000
-

210,000
595,000
308,000
-

20,000
130,000
40,000
-

$ 1,900,000

350,000

(88,000) $
(510,000)
(380,000)
(170,000)
(752,000)
$ (1,900,000) $

(25,000)
(60,000)
(100,000)
(25,000)
(140,000)
(350,000)

Page 1

Consolidation Entries
Debit
Credit

P02-24
PRATT COMPANY AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 2013
Assets
Cash
Receivables
Inventory
Computer software
Buildings (net)
Equipment (net)
Client contracts
R & D asset
Goodwill
Total assets
Liabilities and Owners' Equity
Accounts payable
Notes payable
Common stock
Additional paid-in capital
Retained earnings
Total liabilities and equities

Page 2

P02-24

Consolidated
Totals
$
54,000
168,000
230,000
495,000
230,000
725,000
348,000
$ 2,250,000
$

(113,000)
(570,000)
(480,000)
(195,000)
(892,000)
$ (2,250,000)

Correct!
Correct!
Correct!
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Try again!
Correct!
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Try again!
Try again!
Try again!
Try again!
Correct!
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Try again!
Try again!
Try again!

Page 3

P02-24

Page 4

Given P02-24
Given Data P02-24:
PRATT COMPANY
Spider Inc. outstanding stock
acquired by Pratt Company
Cash paid by Pratt for acquisition

100%
495,000

Assessment of Spider's fair and book value differences:

Book
Fair
Values
Values
Computer software
$
20,000 $
70,000
Equipment
40,000
30,000
Client contracts
100,000
In-process research and development
40,000
Notes payable
(60,000)
(65,000)
December 31, 2013 Financial Information
Pratt
Cash
$
36,000
Receivables
116,000
Inventory
140,000
Investment in Spider
495,000
Computer software
210,000
Buildings (net)
595,000
Equipment (net)
308,000
Client contracts
Goodwill
Total assets
$ 1,900,000
Accounts payable
Notes payable
Common stock
Additional paid-in capital
Retained earnings
Total liabilities and equities

Spider
$
18,000
52,000
90,000
20,000
130,000
40,000
$
350,000

(88,000) $
(510,000)
(380,000)
(170,000)
(752,000)
$ (1,900,000) $

Page 5

(25,000)
(60,000)
(100,000)
(25,000)
(140,000)
(350,000)

P02-29
Student Name:
Class:
Problem 02-29
Part C only:
PACIFICA INC., AND SEGUROS CO.
Consolidation Worksheet
December 31, 2012

Accounts
Revenues
Expenses
Net income

Pacifica

Retained earnings, 1/1

Net income
Dividends paid
Retained earnings, 12/31

Cash
Receivables and inventory
Property, plantm and equipment
Investment in Seguros
Research and development asset
Goodwill
Trademarks
Total assets
Liabilities
Contingent performance obligation
Common stock
Additional paid-in capital
Retained earnings
Total liabilities and equities

Page 6

Seguros

Consolidation Entries
Debit

P02-29

Consolidation Entries
Credit

Consolidated
Totals

Page 7

Given P02-29
Given Data P02-29:
Seguros Company outstanding voting shares
acquired by Pacifica Inc.
Pacifica Company's $5 par common stock issued
for acquisitionnumber of shares
Market value of Pacifica stock at acquisition date
Cash paid by Pacifica when Seguros meets certain goals
Fair value of Seguros R & D project
Profitability percentage needed for Seguros to meet goals
Discount rate used to represent time value of money
Legal fees paid by Pacifica in connection with acquisition
Stock issuance costs paid by Pacifica
Seguros Company fully amortized patentvalue

Revenues
Expenses
Net income
Retained earnings, 1/1/12
Net income
Dividends paid
Retained earnings, 12/31/12
Cash
Receivables and inventory
Property, plant, and equipment
Trademarks
Total assets
Liabilities
Common stock
Additional paid-in capital
Retained earnings
Total liabilities and equities

110,000
750,000
1,400,000
300,000
$ 2,560,000
$ (500,000)
(400,000)
(475,000)
(1,185,000)
$ (2,560,000)

$
$
$

$
$
$

50,000
20
130,000
100,000
50%
4%
15,000
9,000
30,000

Seguros Company
Book
Fair
Values
Values

Pacifica, Inc.
$ (1,200,000)
875,000
$ (325,000)
$ (950,000)
(325,000)
90,000
$ (1,185,000)
$

100%

$
$

85,000 $
190,000
450,000
160,000
885,000
(180,000) $
(200,000)
(70,000)
(435,000)
(885,000)

Page 8

85,000
180,000
600,000
200,000
(180,000)