Business, 19.05.2021 19:00 jeffljr7385

Bargain Purchase: Sontag Corporation's net assets have fair values as described below. Current assets $250,000
Land 600,000
Building 1,000,000
Loans payable 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:
1. Prepare a schedule to calculate the gain on acquisition.
2. Prepare Pratt's journal entry to record the merger.
3. Now assume Pratt determines that Sontag Corporation has unreported contingent liabilities, reportable at the date of acquisition following GAAP, with a fair value of $75,000. Recalculate the gain on acquisition.

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

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