On January 1, NewTune Company exchanges 17,543 shares of its common stock for all of the outstanding shares of On-the-Go, Incorporated. 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 $33,400 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 Items Record music catalog In-process research and development Notes payable Book Values $ 57,750 109,250 Fair Values $ 54,700 257,000 81,750 274,500 216,000 (58,000) (48,900) Precombination book values for the two companies are as follows: Items Cash Receivables Trademarks Record music catalog Equipment (net) Totals Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Totals NewTune) $ 68,500 134,500 415,000 885,000 330,000 $ 1,833,000 $ (189,000) (431,000) (400,000) (30,000) (783,000) $ (1,833,000) On-the-Go $ 37,750 57,750 109,250 81,750 112,000 $ 398,500 $ (54,000) (58,000) (50,000) (30,000) (206,500) $ (398,500) Required: 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. 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. Complete this question by entering your answers in the tabs below.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 4MC: Effective May 1, the shareholders of Baltimore Corporation approved a 2-for-1 split of the companys...
icon
Related questions
Question
On January 1, NewTune Company exchanges 17,543 shares of its common stock for all of the outstanding shares of On-the-Go,
Incorporated. 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 $33,400 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
Items
Record music catalog
In-process research and development
Notes payable
Book Values
$ 57,750
109,250
Fair Values
$ 54,700
257,000
81,750
274,500
216,000
(58,000)
(48,900)
Precombination book values for the two companies are as follows:
Items
Cash
Receivables
Trademarks
Record music catalog
Equipment (net)
Totals
Accounts payable
Notes payable
Common stock
Additional paid-in capital
Retained earnings
Totals
NewTune)
$ 68,500
134,500
415,000
885,000
330,000
$ 1,833,000
$ (189,000)
(431,000)
(400,000)
(30,000)
(783,000)
$ (1,833,000)
On-the-Go
$ 37,750
57,750
109,250
81,750
112,000
$ 398,500
$ (54,000)
(58,000)
(50,000)
(30,000)
(206,500)
$ (398,500)
Required:
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.
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.
Complete this question by entering your answers in the tabs below.
Transcribed Image Text:On January 1, NewTune Company exchanges 17,543 shares of its common stock for all of the outstanding shares of On-the-Go, Incorporated. 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 $33,400 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 Items Record music catalog In-process research and development Notes payable Book Values $ 57,750 109,250 Fair Values $ 54,700 257,000 81,750 274,500 216,000 (58,000) (48,900) Precombination book values for the two companies are as follows: Items Cash Receivables Trademarks Record music catalog Equipment (net) Totals Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Totals NewTune) $ 68,500 134,500 415,000 885,000 330,000 $ 1,833,000 $ (189,000) (431,000) (400,000) (30,000) (783,000) $ (1,833,000) On-the-Go $ 37,750 57,750 109,250 81,750 112,000 $ 398,500 $ (54,000) (58,000) (50,000) (30,000) (206,500) $ (398,500) Required: 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. 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. Complete this question by entering your answers in the tabs below.
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College