On January 1, NewTune Company exchanges 16,167 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 $31,400 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: Receivables Trademarks Record music catalog In-process research and development Notes payable Book Values $ 50, 750 104, 250 75,000 0 (68,250) Fair Values $ 44,200 250,500 201,750 225,000 (62,750) Precombination book values for the two companies are as follows: 63,000 Cash Receivables Trademarks Record music catalog Equipment (net) Totals Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Totals NewTune On-the-Go $ $ 38,500 126,000 50,750 459,000 104,250 841,000 75,000 389,000 133,000 $ 1,878,000 $ 401,500 $ (129,000) $ (52,750) (370,000) (68,250) (400,000) (50,000) (30,000) (30,000) (949,000) (200,500) $(1,878,000) $ (401,500) 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. Complete this question by entering your answers in the tabs below. 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 New Tune. On-the-Go will be dissolved and will no longer exist as a legal entity. Prepare a postcombination balance sheet for New Tune as of the acquisition date. NEWTUNE COMPANY AND ON-THE-GO, INC. Post-Combination Balance Sheet January 1, 2018 Assets Liabilities and Stockholders' Equity Cash Accounts payable Receivables Notes payable Trademarks Common stock Record music catalog Additional paid-in capital Research and development asset Retained earnings Equipment Goodwill Total assets $ 0 Total liabilities and equities $ 0 Required A Required B > NEWTUNE COMPANY AND ON-THE-GO, INC. Consolidation Worksheet January 1, 2018 Consolidation Entries Accounts Newtune Co On-the-Go, Inc. Debit Credit Consolidated Totals Cash Receivables Investment in On-the-Go Trademarks Record music catalog Research and development asset Equipment Goodwill Total assets $ 0 0 $ 0 Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities 0 0 $ 0 0 0
