On January 1, 2015, NewTune Company exchanges 18,430 shares of its commons stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTune's shares has a $10 par value and a $50 fair value. The fair value fo the stock exchanged in the acquisition was considered equal to On-the-Go's fair value. NewTune also paid $32,700 in stock registratio and issuance costs in connection with the merger.
Assuming that the Board of Directors of NewTune votes to dissolve On-The-Go Company on February 1, 2015, prepare the journal entries necessary to this dissolution.
Assuming that the pooling of interest method is still generally acceptable and NewTune uses the pooling of interest method to account for the acquisition of On-The-Go Company, prepare the journal entries necessary to record the Investment in On-The-Go on the date of acquisition.
Assuming that the Board of Directors of NewTune votes to dissolve On-The-Go Company on February 1, 2015, prepare the journal entries necessary to this dissolution.
|
Book Values |
Fair Values |
| Receivables |
86,500 |
84,200 |
| Trademarks |
116,250 |
280,500 |
| Record music catalog |
68,750 |
260,750 |
| In-process research and development |
0 |
215,250 |
| Notes Payable |
64,000 |
54,600 |
Precombination January 1, 2015, book values for the two companies are as follows:
|
NewTune |
On-the-Go |
| Cash |
67,750 |
37,250 |
| Receivables |
104,250 |
86,500 |
| Trademarks |
414,000 |
116,250 |
| Record music catalog |
837,000 |
68,750 |
| Equipment (net) |
382,000 |
113,000 |
|
|
|
| Totals |
1,805,000 |
421,750 |
|
|
|
| Accounts payable |
116,000 |
47,250 |
| Notes payable |
391,000 |
64,000 |
| Common stock |
400,000 |
50,000 |
| Additional paid-in capital |
30,000 |
30,000 |
| Retained earnings |
868,000 |
230,500 |
|
|
|
| Totals |
1,805,000 |
421,750 |