On January 1, New Tune Company exchanges 16,329 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of New Tune'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 poid $46,600 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 parenthesest took Tair Values Yalo Receivables $ 34,000 27.700 Trademarka 99,250 252,250 Record munte catalog 201,000 In-procesearch and development 0 201,750 We payable (67.500) (61.000) 61,500 Precombination book values for the two companies are as follows: Metune On-the- Cash 65,250 151.500 Receivable 45.750 34.000 Trademark 400,000 99.250 Records matulog 926,000 61.500 inant (net) 416,000 171,000 Total Asset 31,939,000.5517,250 Recounts payable 5 (144,000) 5 (57.250) ter payable (417,000) (67.500) Common stock (400,000) 150.000 Additional paid.in capital (30,000) 30.000) Metained earnings (945.000 212,500) Total Itabilities and equition 11.939.000 17.250) a. Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of New Tune. 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. Required A Required Assume that this combination is a statutory merger so that On-the-Go's accounts will be transferred to the records of New Tune. 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, 20XX Assets Liabilities and Equity Cash Accounts payable Receivables Notes payable Trademarks Common stock Record music catalog Additional paid in capital In-process research and development Retained coming Equipment (net) Goodwill Total Totalt and out Required A Required 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. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) Show less NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 20XX Consolidation Entries Accounts Consolidated Newtune Co On-the-Go. Debit Credit Inc. Totals Cash Receivables Investment in On-the-Go Trademarks Record music catalog In-process research and development Equipment (net) Goodwill Total assets Accounts payable Notes payable Common stock Additional pald-in capital Retained earnings Total abilities and equities
