Sontag Corporation's net assets have fair values as described below.
Fair Value
Marketable securities $100,000
Land 800,000
Buildings 500,000
Equipment 300,000
Other net assets 200,000
The Pratt Company pays $3,000,000 for Sontag Corporation, and records the acquisition as a statutory merger. Pratt Company determines that identifiable intangibles valued at $1,300,000, not previously reported on Sontag's books, also are recognized as acquired assets.
Required
a. Prepare a schedule to calculate the gain on acquisition.
b. Prepare Pratt's journal entry to record the merger.