question 34 please

wow YTUJU stock issuance costs and paid $75,000 to an investment banking firm for its assistance in arranging the combination. In negotiating the final terms of the deal, Privacy First also agrees to pay $100,000 to SafeData's former owners if it achieves certain revenue goals in the next two years. Privacy First estimates the probability adjusted present value of this contingent performance obligation at $30,000. a. What is the fair value of the consideration transferred in this combination? b. How should the stock issuance costs appear in Privacy First's postcombination financial statements? c. How should Privacy First account for the fee paid to the investment bank? d. How does the issuance of these shares affect the stockholders' equity accounts of Privacy First, the parent? e. How is the fair value of the consideration transferred in the combination allocated among the assets acquired and the liabilities assumed? f. What is the effect of SafeData's revenues and expenses on consolidated totals? Why? 8. What is the effect of SafeData's Common Stock and Additional Paid-In Capital balances on consolidated totals? h. If Privacy First's stock had been worth only $50 per share rather than $75, how would the con- solidation of SafeData's assets and liabilities have been affected? 34. On January 1, New Tune 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 (credit balances in parentheses): -60 Book Values Fair Values Receivables Trademarks Record music catalog In-process research and development Notes payable $ 65,000 95,000 60,000 -O- (50,000) $ 63,000 225,000 180,000 200,000 (45,000) Precombination book values for the two companies are as follows: Cash Receivables Trademarks Record music catalog Equipment (net) Totals NewTune $ 60,000 150,000 400,000 840,000 320,000 $ 1.770,000 On-the-Go $ 29,000 65,000 95.000 60,000 105,000 $ 354,000 (continued) onsolidated and Not-for-Profit Entities On-the-Go 2 $ (34,000) (50.000) (50,000) (30,000) (190,000) $(354,000 (continued) New Tune $ (110,000) Accounts payable (370,000) Notes payable (400,000) Common stock (30,000) Additional paid-in capital (860,000) Retained earnings Totals $(1.770,000) a. Assume that this combination is a statutory merger so that On-the-Go's accounts will be trans- ferred 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 New Tune as of the acquisition date. b. Assume that no dissolution takes place in connection with this combination. Rather, both com- panies retain their separate legal identities. Prepare a worksheet to consolidate the two compa- nies as of the combination date. c. How do the balance sheet accounts compare across parts (a) and (b)? 35. On December 31, Pacifica, Inc., acquired 100 percent of the voting stock of Seguros Company. Pacifica will maintain Seguros as a wholly owned subsidiary with its own legal and accounting identity. The consideration transferred to the owner of Seguros included 50,000 newly issued Pacifica common shares ($20 market value, $5 par value) and an agreement to pay an additional $130,000 cash if Seguros meets certain project completion goals by December 31 of the following year. Pacifica estimates a 50 percent probability that Seguros will be successful in meeting these goals and uses a 4 percent discount rate to represent the time value of money. Immediately prior to the acquisition, the following data for both firms were available: b, 2-6c, 2-7 Seguros Book Values Seguros Fair Values Pacifica Revenues Expenses Net income Retained earnings, 1/1 Net Income Dividends declared Retained earnings, 12/31 $ $(1,200,000) 875,000 $ (325,000) $ (950,000) (325,000) 90,000 $(1,185,000) $ 110,000 750,000 1,400,000 300,000 $ 2,560,000 $ (500,000) (400,000) (475,000) (1,185,000) $ (2,560,000 85,000 190,000 450,000 160,000 Cash... Receivables and inventory Property, plant, and equipment Trademarks Total assets Liabilities Common stock Additional pald-in capital Retained earnings Total liabilities and equities $ 85,000 180,000 600,000 200,000 $ 885,000 $ (180,000) $ (180,000) (200,000) (70,000) (435,000) $ (885,000 In addition, Pacifica assessed a research and development project under way at Seguros to have a fair value of $100,000. Although not yet recorded on its books, Pacifica paid legal fees of $15,000 in connection with the acquisition and $9,000 in stock issue costs. Prepare the following: a. Pacifica's entries to account for the consideration transferred to the former owners of Seguros the direct combination costs, and the stock issue and registration cost value factor where applicable)