On January 1, 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 Values Fair Values Receivables . .. . $ 65,000 $ 63,000 Trademarks 95,000 225,000 180,000 Record music catalog .. . 60,000 In-process research and development -0- 200,000 Notes payable . (50,000) 45,000 Precombination book values for the two companies are as follows: New Tune On-the-Go $ 29,000 Cash 60,000 Receivables . .. 150,000 65,000 400,000 95,000 Trademarks Record music catalog 840,000 60,000 Equipment (net).. 320,000 105,000 Totals . $ 1,770,000 $ 354,000 Accounts payable $ (110,000) $ (34,000) page 85 Notes payable (370,000) (50,000) Common stock . (400,000) (50,000) Additional paid-in capital. (30,000) (30,000) Retained earnings (860,000) _(190,000) $(354,000 Totals $(1,770,000)