Bargain Purchase Sigma Ltd's net assets have fair values as described below:

	Fair Value
Current assets	$300,000
Land	$700,000
Buildings and equipment	$1,100,000
Loans payable	$(350,000)

Tau Corporation pays $3,000,000 for Sigma Ltd and records the acquisition as a merger. Tau Corporation determines that identifiable intangibles valued at $1,500,000, not previously reported on Sigma’s books, are also recognized as acquired assets.

Required: a. Prepare a schedule to calculate the gain on acquisition. b. Prepare Tau’s journal entry to record the merger. c. Now assume Tau determines that Sigma Ltd has unreported contingent liabilities, reportable at the date of acquisition following GAAP, with a fair value of $75,000. Recalculate the gain on acquisition.