10 9 Problem 2-34 (Algo) (LO 2-4, 2-5, 2-68, 2-6b, 2-6c, 2-7, 2-8) On January 1, NewTune Company exchanges 17,590 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 $30,100 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): Trademarks Record music catalog In-process research and development Book Values Fair values $ 79,250 $ 77,150 115,000 265,000 63,500 183,750 (02,750) (54,200) Precombination book values for the two companies are as follows: Cash Record music catalog Equipment (net) Total Assets Notes payable NewTune On-the-Go 70,750 $ 30,250 85,250 79,250 115,000 Accounts payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities $1,877,000 $421,000 S (145,000) (4,750) (396,000) (62,750) (400,000) (10,000) (0,000) (30,000) (231,500) (905,000) $(1,877,000) 5 (421,000)