Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On January 1, 2015, 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
On January 1, 2015, 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: Book Fair Values Values 63,000 Receivables 65,000 Trademarks 95,000 225,000 180,000 Record music catalog 60,000 In-process research and 200,000 development Notes payable 50.000 (45,000) Precombination January 1, 2015, book values for the two companies are as follows New Tune On-the-Go Cash 60.000 29,000 Receivables 50.000 65,000 Trademarks 400,000 95,000 Record music catalog 840,000 60.000 Equipment (net) 320.000 05.000 Totals 1,770,000 354,000 Accounts payable (110,000) (34,000) Notes payable (370,000) 50.000 Common stock 400,000 50.000 Additional paid-in capital (30,000 (30,000 Retained earnings 860.000 90.000 Totals $(1,770,000 $(354,000) Note: Parentheses indicate a credit balance
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started