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On January 1, NewTune Company exchanges 19,681 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 was considered equal to On-the-Go's fair value. NewTune also paid $37,050 in stock registration and issuance costs in connection with the merger. Several of On-the-Go's accounts' fair values differ from their book values on this date (credit balances in parentheses): Receivables Trademarks Record music catalog In-process research and development Notes payable Cash Receivables Trademarks Record music catalog Equipment (net) Precombination book values for the two companies are as follows: NewTune On-the-Go 75,750 $ 45,750 82,250 54,000 410,000 923,000 340,000 Total Assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities Book Values $ Fair Values $ 54,000 $ 51,500 110,750 303,500 84,750 271,500 0 255,750 (65,250) (56,850) 110,750 84,750 115,000 $ 1,831,000 $ 410,250 $ (148,000) $ (35,000) (436,000) (65,250) (400,000) (50,000) (30,000) (30,000) (817,000) (230,000) $(1,831,000) $(410,250) 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 the acquisition date.

On January 1, NewTune Company exchanges 19,681 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 was considered equal to On-the-Go's fair value. NewTune also paid $37,050 in stock registration and issuance costs in connection with the merger. Several of On-the-Go's accounts' fair values differ from their book values on this date (credit balances in parentheses): Receivables Trademarks Record music catalog In-process research and development Notes payable Cash Receivables Trademarks Record music catalog Equipment (net) Precombination book values for the two companies are as follows: NewTune On-the-Go 75,750 $ 45,750 82,250 54,000 410,000 923,000 340,000 Total Assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities Book Values $ Fair Values $ 54,000 $ 51,500 110,750 303,500 84,750 271,500 0 255,750 (65,250) (56,850) 110,750 84,750 115,000 $ 1,831,000 $ 410,250 $ (148,000) $ (35,000) (436,000) (65,250) (400,000) (50,000) (30,000) (30,000) (817,000) (230,000) $(1,831,000) $(410,250) 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 the acquisition date.

FINANCIAL ACCOUNTING
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, NewTune Company exchanges 19,681 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 was considered equal to On-the-Go's fair value. NewTune also paid $37,050 in stock registration and issuance costs in connection with the merger. Several of On-the-Go's accounts' fair values differ from their book values on this date (credit balances in parentheses): Receivables Trademarks Record music catalog In-process research and development Notes payable Cash Receivables Trademarks Record music catalog Equipment (net) Total Assets Accounts payable Notes payable Common stock Precombination book values for the two companies are as follows: NewTune On-the-Go 75,750 $ 45,750 82,250 54,000 410,000 110,750 923,000 84,750 340,000 115,000 $ 1,831,000 $ 410,250 Additional paid-in capital Retained earnings Total liabilities and equities Book Values $ Fair Values $ 54,000 $ 51,500 110,750 303,500 84,750 271,500 0 255,750 (65,250) (56,850) $ (148,000) $ (35,000) (436,000) (400,000) (65,250) (50,000) (30,000) (30,000) (817,000) (230,000) $(1,831,000) $(410,250) 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 the acquisition date.
Transcribed Image Text:On January 1, NewTune Company exchanges 19,681 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 was considered equal to On-the-Go's fair value. NewTune also paid $37,050 in stock registration and issuance costs in connection with the merger. Several of On-the-Go's accounts' fair values differ from their book values on this date (credit balances in parentheses): Receivables Trademarks Record music catalog In-process research and development Notes payable Cash Receivables Trademarks Record music catalog Equipment (net) Total Assets Accounts payable Notes payable Common stock Precombination book values for the two companies are as follows: NewTune On-the-Go 75,750 $ 45,750 82,250 54,000 410,000 110,750 923,000 84,750 340,000 115,000 $ 1,831,000 $ 410,250 Additional paid-in capital Retained earnings Total liabilities and equities Book Values $ Fair Values $ 54,000 $ 51,500 110,750 303,500 84,750 271,500 0 255,750 (65,250) (56,850) $ (148,000) $ (35,000) (436,000) (400,000) (65,250) (50,000) (30,000) (30,000) (817,000) (230,000) $(1,831,000) $(410,250) 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 the acquisition date.
Required A Required B Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their separate legal identities. Prepare a worksheet to consolidate the two companies as of the combination date. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) Show less Cash Accounts Receivables Investment in On-the-Go Trademarks NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 20XX Record music catalog In-process research and development Equipment (net) Goodwill Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities Newtune Co $ $ On-the-Go, Inc. 0 $ 0 $ 0 0 $ Consolidation Entries Credit Debit 0 $ 0 Consolidated Totals $ $ 0
Transcribed Image Text:Required A Required B Assume that no dissolution takes place in connection with this combination. Rather, both companies retain their separate legal identities. Prepare a worksheet to consolidate the two companies as of the combination date. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) Show less Cash Accounts Receivables Investment in On-the-Go Trademarks NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 20XX Record music catalog In-process research and development Equipment (net) Goodwill Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities Newtune Co $ $ On-the-Go, Inc. 0 $ 0 $ 0 0 $ Consolidation Entries Credit Debit 0 $ 0 Consolidated Totals $ $ 0
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