On December 31,2012, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for $1.8 billion cash. The balance sheets of Paxon and Saxon, immediately prior to the combination, are shown below:

Several of Saxon's assets and liabilities had fair values that were different from their book values. Estimates of the fair values of these items follow:
(in millions)Estimated Fair Value
Inventory ................................................................... $1,000
Long-term marketable securities (held-to-maturity portfolio) .......... 250
Land ............................................................................ 420
Buildings and equipment, net ............................................... 900
Long-term debt ............................................................... 290
Required
a. Calculate the gain on acquisition in this bargain purchase.
b. Prepare a working paper to consolidate the balance sheets of Paxon and Saxon at December 31, 2012.

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Balance Sheets (in millions) Assets Cash and receivables...._ Inventory.... Long-term marketable securities.. Paxon Saxon $2,860 720 900 300 175 1,700 Land.... 650 1000) 2,400 $7,610 600(net) Total assets $2,695 Liabilities and Stockholders' Equity Long-term debt.. Additional paid-in capital.r.... $1,500 2,000 500 1,200 2,410 $1,000 400 100 350 845 Retained earnings . . .. $7,610 $2,695