Bargain Purchase Sontag Corporation's net assets have fair values as described below. Fair Value Current assets.....

 

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Bargain Purchase Sontag Corporation's net assets have fair values as described below. Fair Value Current assets.. Land.... Buildings and equipment. Loans payable ..... $ 250,000 B00,000 1,000,000 (300,000) The Pratt Company pays $3,000,000 for Sontag Corporation, and records the acquisition as a merger. Pratt Company determines that identifiable intangibles valued at $1,500,000, 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. c. Now assume Pratt determines that Sontag Corporation has unreported contingent liabilities, report- able at the date of acquisition following GAAP, with a fair value of $75,000. Recalculate the gain on acquisition. Bargain Purchase Sontag Corporation's net assets have fair values as described below. Fair Value Current assets.. Land.... Buildings and equipment. Loans payable ..... $ 250,000 B00,000 1,000,000 (300,000) The Pratt Company pays $3,000,000 for Sontag Corporation, and records the acquisition as a merger. Pratt Company determines that identifiable intangibles valued at $1,500,000, 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. c. Now assume Pratt determines that Sontag Corporation has unreported contingent liabilities, report- able at the date of acquisition following GAAP, with a fair value of $75,000. Recalculate the gain on acquisition.