Newtune company
roa, z0w, z-oc, 2Tzoj On January 1, NewTune Company exchanges 16,921 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 $28,900 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: ook Fair Values Values $ 56,750 116,250 65,500 Receivables $50,250 Trademarks Record music catalog In-process research and development Notes payable 276,000 243,250 0 201,750 64,800) (74,000) Precombination book values for the two companies are as follows: NewTune On-the-Go Cash S 68,750 147,250 452,000 37,250 56,750 116,250 65,500 122,000 Receivables Trademarks Record music catalog Equipment (net) 878,000 354,000 $397,750 Totals $1,900,000 Accounts payable Notes payable S $ (111,000) $ (49,750) (418,000) (400,000) (30,000) (941,000) (74,000) (50,000) (30,000) Common stock Additional paid-in capital Retained earnings (194,000) $ (1,900,000) $(116,250) Totals 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. 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 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. NEWTUNE COMPANY AND ON -THE-GO, INC. Post-Combination Balance Sheet January 1, 2018 Assets Liabilities and Stockholders' Equity Accounts payable Cash Receivables Notes payable Common stock Trademarks Additional paid-in capital Record music catalog Retained earnings Research and development asset Equipment Goodwill Total assets 0 Total liabilities and equities 0 $ Required A Required B Consolidation Worksheet January 1, 2018 Consolidation Entries On-the-Go, Inc. Consolidated Totals Accounts Newtune Co Credit Debit Cash Receivables Investment in On-the-Go Trademarks Record music catalog Research and development asset Equipment Goodwill Total assets $ C 0 C Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings 0$ Total liabilities and equities $ C C $ C Required A Required B
