On January 1, 2011, 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 have fair values that differ from their book values on this date:

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 January 1, 2011, 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	840,000	60,000
Equipment (net)	320,000	105,000
Totals	$1,770,000	$354,000
Accounts payable	($110,000)	($34,000)
Notes payable	370,000	50,000
Common stock	400,000	50,000
Additional paid-in capital	30,000	30,000
Retained earnings	860,000	190,000
Totals	($1,770,000)	($354,000)

Required:

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. Using the acquisition method, 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. Using the acquisition method, 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)?