Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Question
Chapter 2, Problem 34P
a.
To determine
Prepare a post-combination
b.
To determine
Prepare a worksheet to consolidate the two companies as of the combination date.
c.
To determine
Explain the way in which the balance sheet accounts compare across parts (a) and (b).
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On January 1, NewTune Company exchanges 15,000 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 $25,000 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):
Book Values
Fair Values
Receivables
$ 65,000
$ 63,000
Trademarks
95,000
225,000
Record music catalog
60,000
180,000
In-process research and development
–0–
200,000
Notes payable
(50,000)
(45,000)
Precombination book values for the two companies are as follows:
NewTune
On-the-Go
Cash
$ 60,000
$ 29,000
Receivables
150,000
65,000
Trademarks
400,000
95,000
Record music catalog…
On January 1, NewTune Company exchanges 17,049 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 $37,300 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):
Book Values
Fair Values
Receivables
$
77,500
$
72,400
Trademarks
108,000
238,500
Record music catalog
75,500
197,750
In-process research and development
0
262,500
Notes payable
(68,500
)
(60,400
)
Precombination book values for the two companies are as follows:
NewTune
On-the-Go
Cash
$
73,250
$
44,000
Receivables
152,750
77,500
Trademarks
462,000
108,000
Record music catalog
875,000…
On January 1, NewTune Company exchanges 16,329 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 $46,600 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):
Book Values
Fair Values
Receivables
$
34,000
$
27,700
Trademarks
99,250
252,250
Record music catalog
61,500
201,000
In-process research and development
0
201,750
Notes payable
(67,500
)
(61,000
)
Precombination book values for the two companies are as follows:
NewTune
On-the-Go
Cash
$
65,250
$
51,500
Receivables
45,750
34,000
Trademarks
488,000
99,250
Record music catalog
924,000…
Chapter 2 Solutions
Advanced Accounting
Ch. 2 - Prob. 1QCh. 2 - Describe the concept of a synergy. What are some...Ch. 2 - Prob. 3QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - On June 1, Cline Co. paid 800,000 cash for all of...Ch. 2 - On May 1, Donovan Company reported the following...Ch. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 39APBCh. 2 - Prob. 40APB
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