User Account

All Pages

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

Artificial intelligence and neural networks, examine the resemblance betwee...

examine the resemblance between Artificial intelligence and neural networks

Demand curve for a consumer, Suppose the consumer is at coffee shop 1. Coff...

Suppose the consumer is at coffee shop 1. Coffee shop 1 charges $2.00 per cup. - Draw and label the demand curve for a cup of coffee for the consumer (please do not forget to sp

Cash budget, What is a cash budget? How it is useful in managerial decision...

What is a cash budget? How it is useful in managerial decision making?

Calculate the claim under insurance policy, Calculate the claim under insur...

Calculate the claim under insurance policy: 1) What do policy limits of 200/300/100 on an automobile insurance policy mean?Your automobile insurance policy contains policy lim

What should be the basic earnings per share, Information concerning the cap...

Information concerning the capital structure of Piper Corporation is as follows: December 31, 2011 2010 Common stock 150,000 shares 150,000 shares Convertible preferred stock 15,00

State the accounting as an information system, State the Accounting as an i...

State the Accounting as an information system We know that accounting can be seen as provision of a service to 'clients'. Another way of viewing accounting is as a part of busi

Prepare the journal entry at the date of the bond issuance, On January 1, 2...

On January 1, 2012, Osborn Company sold 12% bonds having a maturity value of $800,000 for $860,651.79, which provides the bondholders with a 10% yield. The bonds are dated January

Leverage, Evaluate the importance of leverage in financial management of a ...

Evaluate the importance of leverage in financial management of a small scale company

Calculate shares no., Q. Bento, Inc. had 500,000 shares of common stock out...

Q. Bento, Inc. had 500,000 shares of common stock outstanding before a stock split occurred, and 1,500,000 shares outstanding after the stock split. The stock split was a. 2-for-5.

Credit control, Once credit has been extended it is vital to ensure that cu...

Once credit has been extended it is vital to ensure that customers abide by agreed terms of trade. Regular checks on customer accounts for instance using an aged receivables analys

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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