Statutory Merger, Financial Accounting

On January 1, 2013, NewTune Company exchanges 15,000 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each 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 Om-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 have fair values that differ from their book values on this date:
Receivables $65,000 (book value) $63,000 (fair value)
Trademarks 95,000 (BV) 225,000 (FV)
Record music catalog 60,000 (BV) 180,000 (FV)
In-process research and development -0- (BV) 200,000 (FV)
Notes Payable (50,000) (BV) (45,000) (FV)

Precombination January 1, 2013, book values for the two companies are as follows:
Cash $60,000 (NT) $29,000 (On-the-Go)
Receivables 150,000 (NT) 65,000 (OTG)
Trademarks 400,000 (NT) 95,000 (OTG)
Record music catalog 840,000 (NT) 60,000 (OTG)
Equipment 320,000 (NT) 105,000 (OTG)
Totals: NewTune: $1,770,000 On-the-Go: $354,000
Accounts Payable $(110,000) (NT) (34,000) (OTG)
Notes Payable (370,000) (NT) (50,000) (OTG)
Common Stock (400,000) (NT) (50,000) (OTG)
Additional Paid-in Capital (30,000) (NT) (30,000) (OTG)
Retained earnings (860,000) (NT) (190,000) (OTG)

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.

c. How do the balance sheet accounts compare across parts a and b?
Posted Date: 10/18/2012 10:16:28 PM | Location : United States







Related Discussions:- Statutory Merger, Assignment Help, Ask Question on Statutory Merger, Get Answer, Expert's Help, Statutory Merger Discussions

Write discussion on Statutory Merger
Your posts are moderated
Related Questions
Determine about the accounting information Numerous user groups have an interest in accounting information relating to a business. Majority of these are outside the business ho

Refer to Note 8, Securitization Transactions (pp. 78-80) and an extract from Note 2, Additional Balance Sheet and Cash Flow Information (p. 72-73) from the Consolidated Financial S

Let us assume you expect to obtain Rs.2000 yearly for the next three years. The receipt of Rs.2000 is evenly divided. One part that is: Rs.1000 is obtained at the beginning of the

Sundry Matters 1) The accounting system is also appropriate for departmental accounts. 2) The branch stock account is a practical means of controlling stock at the branch.


Q. What is Demands For Grants? The budget proposals of the expenditures to be met out from the "Consolidated fund of India" should be presented in the form of Demands for Grant


Dawn's new car has a FMV of $20,000 and it weighs 3,000 pounds. The county also assessed a property tax on the car. The tax was 2% of its FMV and $10 per hundred weight. The car is

Q. A case study on TIMBERTOPS? Cost of capital Use Ke = Do (1 + g)/ Po + g where g = br Retention rate b = 245 ÷ 442 = 55% Return on capital r = 442 ÷ (1,932 -

Q. What is Audit Sampling? Audit Sampling - Application of an AUDIT procedure to less than 100% of items within anaccount BALANCE or class of transactions for purpose of evalua