On January 1, NewTune Company exchanges 18.100 shares of its common stock for all of the outstanding shares of On-the-Go, Inc.Each of NewTune's shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition wasconsidered equal to On-the-Go's fair value. NewTune also paid $33,500 in stock registration and issuance costs in connection with themerger.Several of On-the-Go's accounts' fair values differ from their book values on this date (credit balances in parentheses):Book Values Fair Values$ 68,750 $ 66,000282,000113,25068,750B(72,250)ReceivablesTrademarksRecord music catalogIn-process research and developmentNotes payablePrecombination book values for the two companies are as follows:On-the-Go70,750 $ 40,50030,25068,750486,000 113,250853,00068,750413,000110,000$ 1,853,000 $ 401,250CashReceivablesTrademarksRecord music catalogEquipment (net)Total AssetsAccounts payableNotes payableCommon stockAdditional paid-in capitalRetained earningsTotal liabilities and equities$227,000271,500(65,700)NewTune$ (177,000) $ (56,000)(379,000) (72,250)(400,000) (50,000)(30,000) (30,000)(867,000) (193,000)$(1,853,000) $ (401,250)a. Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of NewTune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for NewTune as of theacquisition date.b. Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their separate legalidentities. Prepare a worksheet to consolidate the two companies as of the combination date.

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Answered: On January 1, NewTune Company exchanges…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Peach Company Swartz Company Cash $71,250 $13,190 Accounts receivable (net) 99,260 20,070 Inventory 63,300 26,980 Plant and equipment (net) 99,340 39,970 Land 27,990 21,440 Total assets $361,140 $121,650 Accounts payable $64,130 $16,800 Notes payable 85,460 20,800 Common stock, $20 par value 108,400 36,400 Other contributed capital 58,280 23,800 Retained earnings 44,870 23,850 Total equities $361,140 $121,650 Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.…
Porter Corporation owns all 30,000 shares of the common stock of Street, Inc. Porter has 60,000 shares of its own common stock outstanding. During the current year, Porter earns net income (without any consideration of its investment in Street) of $150,000 while Street reports $130,000. Annual amortization of $10,000 is recognized each year on the consolidation worksheet based on acquisition-date fair-value allocations. Both companies have convertible bonds outstanding. During the current year, bond-related interest expense (net of taxes) is $32,000 for Porter and $24,000 for Street. Porter’s bonds can be converted into 8,000 shares of common stock; Street’s bonds can be converted into 10,000 shares. Porter owns none of these bonds. What are the earnings per share amounts that Porter should report in its current year consolidated income statement?
On January 1, 2015, Wells Corporation acquires 8,000 shares of Towne Company stock and 18,000 shares of Sara Company stock for $176,000 and $240,000, respectively. Each investment is acquired at a price equal to the subsidiary’s book value, resulting in no excesses. Towne Company and Sara Company have the following stockholders’ equities immediately prior toWells’s purchases: Towne Company Sara CompanyCommon stock ($5 par). . . . . . . . . . . . . . . . $ 50,000Common stock ($10 par). . . . . . . . . . . . . . $300,000Paid-in capital in excess of par . . . . . . . . . 100,000Retained earnings . . . . . . . . . . . . . . . . . . . . . 70,000 100,000Total stockholder’s equity. . . . . . . . . . . . . . $220,000 $400,000Additional information is as follows:a. Net income for Towne Company and Sara Company for 2015 and 2016 follows (income is assumed to be earned evenly…
On 12/31, Choco acquired all assets and liabilities of Cake by issuing 40,000 shares of its common stock when the market value (=fair value) is $32/share and this combination is a statutory merger (Cake was dissolved). Choco has common stock with $15 par, 50,000 shares outstanding and Cake has $5 par, 60,000 shares outstanding Choco Book Values Cake Book Values Cake Fair Values Cash and Receivable 350,000 180,000 170,000 Inventories 250,000 100,000 150,000 Land 700,000 120,000 240,000 Building and equipment 600,000 600,000 900,000 Patented technology 100,000 0 60,000 Accounts payable 300,000 120,000 150,000 Long-term debt 0 400,000 350,000 Common stock 750,000 300,000 Additional paid in capital 500,000 60,000 Retained earnings 12/31 450,000 120,000 Revenues 350,000 160,000 Expenses 310,000 130,000 Q1. How much is the consideration transferred? Q2. What is the consolidated balance for Land? Q3. What is the consolidated balance for Accounts…
Alfonso Inc. acquired 100 percent of the voting shares of BelAire Company on January 1, 2020. In exchange, Alfonso paid $455,000 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Alfonso’s stock had a fair value of $15 per share. The combination is a statutory merger with BelAire subsequently dissolved as a legal corporation. BelAire’s assets and liabilities are assigned to a new reporting unit. The following shows fair values for the BelAire reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021. BelAire Reporting Unit Fair Values1/1/20 Carrying Amounts12/31/21 Cash $ 92,000 $ 49,000 Receivables 208,250 244,000 Inventory 234,000 259,000 Patents 753,500 864,000 Customer relationships 597,250 576,000 Equipment (net) 397,500 297,000 Goodwill ? 410,000 Accounts payable (97,500 ) (187,000 ) Long-term liabilities (640,000 ) (542,000…
G Company is considering the takeover of K Company whereby it will issue 8,000 common shares for all of the outstanding shares of K Company. K Company will become a wholly owned subsidiary of G Company. Prior to the acquisition, G Company had 15,000 shares outstanding, which were trading at $9.70 per share. The following information has been assembled: Current assets Plant assets (net) Current liabilities Long-term debt Common shares Retained earnings Current assets Plant assets (net) Goodwill Investment in K Company Acquisition differential Current liabilities Long-term debt Common shares Retained earnings Carrying Amount $67,500 79,000 $146,500 $ 21,900 24,500 67,000 33,100 $146,500 G Company $ $ Fair Value $57,000 89,000 $ (b) Prepare G Company's consolidated balance sheet immediately after the combination using the worksheet approach and the acquisition method. (Leave no cells blank - be certain to enter "0" wherever required. Values in the first two columns and last column (the…

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