On January 1, New Tune Company exchanges 18,668 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. New Tune also paid $33,550 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): Receivables Trademarks Record music catalog In-process research and development Notes payable Book Values Fair Values $ 47.250 $ 44,850 114,500 302.750 84,250 251,500 0 235,500 (70,250) (64,950) Precombination book values for the two companies are as follows: Cash Receivables Trademarks Record music catalog Equipment (net) Total Assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities New Tune On-the-Go $ 71,250 $ 39,250 79,750 47,250 460,000 114,500 858,000 84,250 379,000 127,000 $ 1,848,000 $ 412,250 $ (184,000) $ (34,500) (372,000) (70,250) (400,000) (50,000) (30,000) (30,000) (862,000) (227,500) $ (1,848,000) $ (412,250) 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 legal entity. Prepare a postcombination balance sheet for New Tune 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. co 024295074