ADVANCED ACCOUNTING-EBOOK ACCESS
14th Edition
ISBN: 9781264157068
Author: Hoyle
Publisher: MCG
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Question
Chapter 2, Problem 34P
a.
To determine
Prepare a post-combination
b.
To determine
Prepare a worksheet to consolidate the two companies as of the combination date.
c.
To determine
Explain the way in which the balance sheet accounts compare across parts (a) and (b).
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On January 1, NewTune 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):
Book Values
Fair Values
Receivables
$ 65,000
$ 63,000
Trademarks
95,000
225,000
Record music catalog
60,000
180,000
In-process research and development
–0–
200,000
Notes payable
(50,000)
(45,000)
Precombination book values for the two companies are as follows:
NewTune
On-the-Go
Cash
$ 60,000
$ 29,000
Receivables
150,000
65,000
Trademarks
400,000
95,000
Record music catalog…
On January 1, NewTune Company exchanges 16,329 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 $46,600 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):
Book Values
Fair Values
Receivables
$
34,000
$
27,700
Trademarks
99,250
252,250
Record music catalog
61,500
201,000
In-process research and development
0
201,750
Notes payable
(67,500
)
(61,000
)
Precombination book values for the two companies are as follows:
NewTune
On-the-Go
Cash
$
65,250
$
51,500
Receivables
45,750
34,000
Trademarks
488,000
99,250
Record music catalog
924,000…
On January 1, NewTune Company exchanges 18.100 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 $33,500 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):
Book Values Fair Values
$ 68,750 $ 66,000
282,000
113,250
68,750
B
(72,250)
Receivables
Trademarks
Record music catalog
In-process research and development
Notes payable
Precombination book values for the two companies are as follows:
On-the-Go
70,750 $ 40,500
30,250
68,750
486,000 113,250
853,000
68,750
413,000
110,000
$ 1,853,000 $ 401,250
Cash
Receivables
Trademarks
Record music catalog
Equipment (net)
Total Assets
Accounts payable
Notes payable
Common stock
Additional…
Chapter 2 Solutions
ADVANCED ACCOUNTING-EBOOK ACCESS
Ch. 2 - Prob. 1QCh. 2 - Describe the concept of a synergy. What are some...Ch. 2 - Prob. 3QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - On June 1, Cline Co. paid 800,000 cash for all of...Ch. 2 - On May 1, Donovan Company reported the following...Ch. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 39APBCh. 2 - Prob. 40APB
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