Required A Required B Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of New Tune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for New Tune as of the acquisition date. Cash Receivables Trademarks NEWTUNE COMPANY AND ON-THE-GO, INC. Post-Combination Balance Sheet January 1, 20XX Total assets Assets Record music catalog In-process research and development Equipment (net) Goodwill $ Liabilities and Equity Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings 0 Total liabilities and equities $ 0
Required A Required B Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of New Tune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for New Tune as of the acquisition date. Cash Receivables Trademarks NEWTUNE COMPANY AND ON-THE-GO, INC. Post-Combination Balance Sheet January 1, 20XX Total assets Assets Record music catalog In-process research and development Equipment (net) Goodwill $ Liabilities and Equity Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings 0 Total liabilities and equities $ 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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.
Transcribed Image Text:Required A Required B
Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of
New Tune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for
New Tune as of the acquisition date.
Cash
NEWTUNE COMPANY AND ON-THE-GO, INC.
Post-Combination Balance Sheet
January 1, 20XX
Total assets
Assets
Receivables
Trademarks
Record music catalog
In-process research and development
Equipment (net)
Goodwill
$
<
0
Liabilities and Equity
Accounts payable
Notes payable
Common stock
Additional paid-in capital
Retained earnings
Total liabilities and equities
Required A
Required B >
$
0
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