Bargain Purchase Pi Inc.'s net assets have fair values as described below:

	Fair Value
Current assets	$450,000
Land	$1,300,000
Buildings and equipment	$1,700,000
Loans payable	$(500,000)

Rho Company pays $4,800,000 for Pi Inc. and records the acquisition as a merger. Rho Company determines that identifiable intangibles valued at $2,300,000, not previously reported on Pi’s books, are also recognized as acquired assets.

Required: a. Prepare a schedule to calculate the gain on acquisition. b. Prepare Rho’s journal entry to record the merger. c. Now assume Rho determines that Pi Inc. has unreported contingent liabilities, reportable at the date of acquisition following GAAP, with a fair value of $110,000. Recalculate the gain on acquisition.