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

	Fair Value
Current assets	$400,000
Land	$1,200,000
Buildings and equipment	$1,500,000
Loans payable	$(450,000)

Lambda Corporation pays $4,300,000 for Kappa Corp and records the acquisition as a merger. Lambda Corporation determines that identifiable intangibles valued at $2,000,000, not previously reported on Kappa’s books, are also recognized as acquired assets.

Required: a. Prepare a schedule to calculate the gain on acquisition. b. Prepare Lambda’s journal entry to record the merger. c. Now assume Lambda determines that Kappa Corp has unreported contingent liabilities, reportable at the date of acquisition following GAAP, with a fair value of $100,000. Recalculate the gain on acquisition.