Statutory Merger, Financial Accounting

Assignment Help:
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?

Related Discussions:- Statutory Merger

Prepare traditional income statement, Scottsdale Fine Piano%u2019s purchase...

Scottsdale Fine Piano%u2019s purchases pianos from a well-known manufacturer and sells them through their retail store. The Baby Grand Pianos sell, on average, for $2,500 each. The

Estimate expected returns, Use the data from "Beating the Market Quarterly"...

Use the data from "Beating the Market Quarterly" problem. Use that data to estimate expected returns and a covariance table for the 5 stocks from that problem. Use your estimates t

Maximum cost recovery deduction, In May of 2010 a calendar year taxpayer, p...

In May of 2010 a calendar year taxpayer, placed in service $2,137,000 of USED 15-year recovery property. The taxpayer has taxable income of $1,175,000 before the cost recover

Objective type question, 1 The entry establishing a $175 petty cash fund wo...

1 The entry establishing a $175 petty cash fund would include a: a) debit to cash for $175 b) credit to Petty cash for $175 c) debit to petty cash for $175 d) debit to miscellaneou

Voluntary settlements-bankruptcy, Voluntary settlements The trustee can...

Voluntary settlements The trustee can claim all property settled by the bankrupt on other persons within two years preceding the bankruptcy unless made: a. Before and in consi

The opening entries-executorship laws and accounts, The opening entries 1...

The opening entries 1. Assets of the estate or trust In both cases the various assets of the estate or trust are debited to appropriate accounts and credited to the Estate Ca

Cash flow, prepare a cash flow statement

prepare a cash flow statement

Discuss the pros and cons of financing in unhedged, You have the following ...

You have the following information about rates in London for Eurocurrency loans of one-year duration, the exchange rate between the USD and euros, the currency in which you want fi

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd