On January 1, 2009, NewTune Company exchanges 15,000 shares of its common stock for all ofthe 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 ofthe 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 have fair values that differ from their book values on this date:

Receivables.

Trademarks.

Record music catalog ..

In-process research and development Notespayable.

Book Values

$ 65,000 95,000 60,000 -0- (50,000)

Fair Values

$ 63,000 225,000 180,000 200,000 (45,000)

Precombination January 1, 2009, book values for the two companies are as follows:

NewTune On-the-Go Cash.

$ 29,000 Receivables.

65,000 Trademarks...

95,000 Record music catalog ........

. 840,000 60,000 Equipment (net).

105,000 Totals.

$ 354,000 Accounts payable.

. $ (110,000)

$ (34,000)

Notes payable.

. (370,000)

(50,000)

Commonstock.

. (400,0001

(50,000)

Additional paid-in capital ...

. (30,000)

(30,000)

Retained earnings ...........

. (860,000)

(190,000)

Totals..

.. $(1,770,000)

$(354,000)

Required:

a. Assume that this combination is a statutory merger so that On-the-Go’s accounts will be trans¬ ferred to the records ofNewTune. On-the-Go will be dissolved and will no longer exist as a legal entity'. Using the acquisition method, 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 com¬ panies retain their separate legal entities. Using the acquisition method, prepare a worksheet to consolidate the two companies as of the combination date.

c. How do the balance sheet accounts compare across parts

(a) and (b)l