On January 1, NewTune Company exchanges 19,681 shares of its common stock for all ofthe outstanding shares of On-the-Go, Inc. Each of NewTune's shares has a $4 par valueand 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 $37,050 in stockregistration 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):ReceivablesTrademarksRecord music catalogIn-process research and developmentNotes payableCashReceivablesTrademarksRecord music catalogEquipment (net)Total AssetsAccounts payableNotes payableCommon stockPrecombination book values for the two companies are as follows:NewTune On-the-Go75,750 $ 45,75082,25054,000410,000110,750923,00084,750340,000115,000$ 1,831,000 $ 410,250Additional paid-in capitalRetained earningsTotal liabilities and equitiesBookValues$FairValues$ 54,000 $ 51,500110,750303,50084,750271,5000255,750(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) $(410,250)a. Assume that this combination is a statutory merger so that On-the-Go's accounts willbe transferred to the records of NewTune. On-the-Go will be dissolved and will nolonger exist as a legal entity. Prepare a postcombination balance sheet for NewTuneas of the acquisition date. Required A Required BAssume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records ofNew Tune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet forNew Tune as of the acquisition date.CashNEWTUNE COMPANY AND ON-THE-GO, INC.Post-Combination Balance SheetJanuary 1, 20XXTotal assetsAssetsReceivablesTrademarksRecord music catalogIn-process research and developmentEquipment (net)Goodwill$<0Liabilities and EquityAccounts payableNotes payableCommon stockAdditional paid-in capitalRetained earningsTotal liabilities and equitiesRequired ARequired B >$0

Answered: Image /qna-images/answer/2daea31a-d294-4509-8514-f367dfa09882.jpg

Answered: Required A Required B Assume that this…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. For each of the following independent scenarios in each of the independent parts: (1) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. Part A (a) On 20 December 20x1, a 90%-owned Subsidiary sold a piece of inventory which it bought for $200,000 to its Parent for $300,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date. (b) On 20 December 20x1, a Parent…
Consolidated Worksheet Preparation You will be creating and entering formulas to complete four worksheets. The first objective is to demonstrate the effect of different methods of accounting for the investments (equity, initial value, and partial equity) on the parent company’s trial balance and on the consolidated worksheet subsequent to acquisition. The second objective is to show the effect on consolidated balances and key financial ratios of recognizing a goodwill impairment loss. Project Scenario Pecos Company acquired 100 percent of Suaro’s outstanding stock for $1,450,000 cash on January 1, 2017, when Suaro had the following balance sheet:(THIS IS IN THE PICTURE) Following is the consolidated information worksheet. December 31, 2018, trial balances Pecos Suaro revenues $ (1,052,000) $ (427,000) operating expenses $ 821,000 $ 262,000 goodwill impairment loss ? income of Suaro ? net income ? $…
Cost method consolidation entries (controlling investment in affiliate, fair value differs from book value) Assume an investee has the following financial statement information for the three years ending December 31, 2019: (At December 31) 2019 2018 2017 Current assets $285,000 $277,500 $207,000 Tangible fixed assets 662,500 575,000 563,000 Intangible assets 40,000 45,000 50,000 Total assets $987,500 $897,500 $820,000 Current liabilities $120,000 $110,000 $850,000 Noncurrent liabilities 266,250 242,500 220,000 Common stock 100,000 100,000 100,000 Additional paid-in capital 100,000 100,000 100,000 Retained earnings 400,000 345,000 300,000 Stockholders' equity 600,000 545,000 500,000 Total liabilities and equity $986,250 $897,500 $820,000 (For the years ended December 31) 2019 2018 2017 Revenues $970,000 $920,000 $850,000 Expenses 875,000 840,000 775,000 Net income $95,000 $80,000 $75,000 Dividends $40,000 $35,000 $25,000 Assume on January 1, 2017, an investor company purchased 100%…
P 1-2 Prepare balance sheet after an acquisition On January 2, 2011, Pet Corporation enters into a business combination with Sea Corporation in which Sea is dissolved. Pet pays $1,650,000 for Sea, the consideration consisting of 66,000 shares of Pet $10 par common stock with a market value of $25 per share. In addition, Pet pays the following expenses in cash at the time of the merger: 22 CHAPTER 1 Finders' fee Accounting and legal fees Registration and issuance costs of securities Balance sheet and fair value information for the two companies on December 31, 2010, immedi- ately before the merger, is as follows (in thousands): Cash Accounts receivable-net Inventories Land Buildings-net Equipment-net Total assets $ 70,000 130,000 80,000 $280,000 Accounts payable Note payable Capital stock, $10 par Other paid-in capital Retained earnings Total liabilities and owners' equity Pet Book Value $ 300 460 1,040 800 2,000 1,000 $5,600 $ 600 1,200 1,600 1,200 1,000 $5,600 Sea Book Value $ 60 100…
Acquisition Entries, Acquisition Costs, Bargain Gain Plastic Corporation is contemplating a business combination with Steel Corporation at December 31, 2021. Steel's condensed balance sheet on that date appears below: Assets Cash and receivables Inventory Equity method investments Land Buildings and equipment Patents Total assets Liabilities and Stockholders' Equity Liabilities Common stock Retained earnings Total liabilities and equity Cash and receivables Inventory Equity method investments Land Description Buildings and equipment Patents Goodwill Liabilities Required Prepare the journal entry to record the business combination of Plastic and Steel for each of the following acquisition costs and combination methods. (a) Plastic acquires Steel as a merger for $250,000 cash. Other direct cash acquisition costs are $20,000. General Journal Description Cash and receivables Inventory Equity method investments. Land Liabilities Cash Buildings and equipment Patents ÷ Description (b) Plastic…
Preparing the consolidation entries for sale of land Assume that during 2015 a wholly owned subsidiary sells land that originally cost $450,000 to its parent for a sale price of $500,000. The parent holds the land until it sells the land to an unaffiliated company on December 31, 2019. The parent uses the equity method of pre-consolidation bookkeeping a. Prepare the required [] consolidation entry in 2015. Description gain Gain on a Cash b. Prepare the required [] consolidation entry required at the end of each year 2016 through 2018 Description Debit Credit gain Retained earnings Land gain Equityment Gain on sa Debit x 50,000 ✓ L c. Assume that the parent re-sells the land outside of the consolidated group for $525,000 on December 31, 2019. Prepare the journal entry made by the parent to record the sale and the required 3 consolidation entry for 2019. Description Credit 50,000 Debi 525,000 0✔ 0✔ Credit 25,000 0✔ 50,000 Dx DU 25,000x d. What will be the amount of gain reported in the…
On 5 June 2022, a parent entity sold inventories to a subsidiary entity for $80. The inventories had previously cost the parent entity $72. All the inventories are still held by the subsidiary at reporting date, 30 June 2022. Ignoring tax effects, the adjustment entry in the consolidation worksheet at reporting date is: a. Sales revenue O b. O C. Cost of sales Inventories Cash Sales revenue Cost of sales Inventories Sales revenue Cost of sales Inventories d. Sales revenue Cash Inventories Cost of sales Dr Ä ÄÄ Ä ÄJÄJ Cr Cr Dr Cr Dr Cr Dr Cr Cr Dr Cr Dr Cr 80 000 72 000 72 000 80 000 72 000 72 000 8 000 72 000 72 000 72 000 72 000 8 000 72 000 72 000
At December 31, 2023, Sandhill Corp's general ledger includes the following account balances: Copyrights $52500 Deposits with advertising agency (will be used to promote goodwill) 43000 Discount on bonds payable 74000 Excess of cost over fair value of identifiable net assets of acquired subsidiary 589500 Trademarks 106000 In the preparation of Sandhill's balance sheet as of December 31, 2023, what should be reported as total intangible assets? O $158500 O $748000 $791000 O $822000
Problem 2At December 31, 20x4, Baby Corporation acquired all of Mommy Enterprises’ common stock. At that date, the book Values and fair values of Mommy’s identifiable assets and liabilities were identical. Balance sheet data for the individual companies and the consolidated entity on January 1, 20x5, are as follows: 1.What balance will be reported as accounts payable in the consolidated balance sheeta. P10,000b. P55,000c. P 75,000d. P120,000 2. What is the par value of baby common stock outstanding at January 1, 20x5? a. No-par b. P30,000c. P100,000d. P130,000
Intangibles: Balance Sheet Presentation and Income Statement Effects Clinton Company has provided information on Intangible assets as follows: 1. A patent was purchased from Lou Company for $1,230,000 on January 1, 2018. Clinton estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of 5850,000 when Lou sold it to Clinton. 2. During 2019, a franchise was purchased from Rink Company for $550,000, In addition, 6% of revenue from the franchise must be pald to Rink. Revenue from the franchise for 2019 was $2,500,000. Clinton estimates the useful life of the franchise to be 5 years and takes a full vear's amortization in the year of purchase. 3. Clinton incurred RAD costs in 2019 as follows: Materials and equipment $147,000 Personnel 178,000 Indirect costs 69,000 $394,000 Clinton estimates that these costs will be recouped by December 31, 2020. 4. On January 1, 2019, Clinton estimates, based on new events,…
Exercise – 1 Prepare a consolidated balance sheet at acquisition and compute consolidated net income one year later On December 31, 2011, The Ocean Corporation purchased 80 percent of the stock of Arabian Sea Company at book value. The data reported on their separate balance sheets immediately after the acquisition follow. At December 31, 2011, The Ocean Corporation owes Arabian Sea $10,000 on accounts payable (All amounts are in thousands). The Arabian Ocean Sea Assets Cash Accounts receivable 64 36 90 68 Inventories 286 112 Investment in Arabian Sea 400 Equipment-net 760 350 1,600 566 Liabilities and Stockholders' Equity Accounts payable Common stock, $10 par Retained earnings 80 66 920 300 600 200 1,600 566 REQUIRED 1. Prepare a consolidated balance sheet for The Ocean Corporation and Subsidiary at December 31, 2011. 2. Compute consolidated net income for 2012 assuming that The Ocean Corporation reported separate income of $340,000 and Arabian Sea Company reported net income of…
On January 1, 2021, Casey Corporation exchanged $3,209,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems. At the acquisition date, Casey prepared the following fair-value allocation schedule: $ 3,209,000 Fair value of Kennedy (consideration transferred) Carrying amount acquired 2,600,000 609,000 Excess fair value to buildings (undervalued) to licensing agreements (overvalued) to goodwill (indefinite life) Accounts Cash Accounts receivable Inventory Investment in Kennedy Buildings (net) Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses). Licensing agreements Goodwill Total assets Accounts payable Long-term debt Common stock Additional paid-in capital Retained earnings Total liabilities and equities $…

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS