Bargain Purchase Sontag Corporation's net assets have fair values as described below. Current assets Land Buildings and equipment Loans payable Fair Value $250,000 800,000 1,000,000 (300,000) The Pratt Company pays $2,800,000 for Sontag Corporation, and records the acquisition as a merger. Pratt Company determines that identifiable intangibles valued at $1,200,000, not previously reported on Sontag's books, also are recognized as acquired assets. Required a. Prepare a schedule to calculate the gain on acquisition. Use a negative sign with any answer that reduces the fair value of net assets (left column only). Price paid $ 0 Fair value of identifiable net assets: Current assets Land Buildings and equipment Identifiable intangibles 0 250,000 Loans payable Gain on acquisition $ b. Prepare Pratt's journal entry to record the merger. Not all drop-down answers may be required for the journal entry. If an account is not required, select "N/A" as your answer. Description Debit Credit 0 0 0 0 0 0 0 0

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