Bargain Purchase Chi Corp's net assets have fair values as described below:

	Fair Value
Current assets	$450,000
Land	$900,000
Buildings and equipment	$1,300,000
Loans payable	$(350,000)

Psi Corporation pays $3,700,000 for Chi Corp and records the acquisition as a merger. Psi Corporation determines that identifiable intangibles valued at $1,700,000, not previously reported on Chi’s books, are also recognized as acquired assets.

Required: a. Prepare a schedule to calculate the gain on acquisition. b. Prepare Psi’s journal entry to record the merger. c. Now assume Psi determines that Chi Corp has unreported contingent liabilities, reportable at the date of acquisition following GAAP, with a fair value of $80,000. Recalculate the gain on acquisition.