Case 2.1 On January 1,2011 Pak Corporation acquired Say Service Corporation for one million shares of Pak Stock, valued at $35 per share. Professional fees connected with the acquisition were $1,200,000 and costs of registering and issuing the new shares were $600,000, both paid in cash. Say performs vehicle maintenance service for owners of auto, truck and bus fleets. Say's balance sheet at acquisition date was as follow: Cash Account receivables Parts inventory Equipment Total Assets 00,000 2,700,000 5,200,000 17,600,000 25,800,000 Current Liabilities Long-term Liabilities Common Stocks Additional Paid in Capital Retained Eamings Total Liabilities and Equity 3,100,000 8,600,000 1,700,000 3,500,000 8,900,000 25,800,000 In reviewing Say's assets and liabilities at the acquisition date, Pak determined the following: On a discounted present value basis, the accounts receivables had a fair value of $2,600,000, and . the long-term liabilities have a fair value of $8,000,000 with maturity of 20 years. The replacement cost of the parts inventory was $6,000,000. .The turnover of short-term assets and liabilities is less than one year. The current replacement cost of the equipment was $19,500,000. The equipment had a 16-year life Say occupies its service facilities under an operating lease with ten years remaining. The rent is below current market Ilevels, giving the lease an estimated fair value of $1,250,000 Say had long-term service contracts with several large fleet owners. These contracts have been profitable; the present value of expected profits over the remaining term (10 years) of the contracts is estimated at $2,000,000. These contracts meet the criteria for recognition separately . . Say had a skilled and experience assembled workforce. Pak estimated that the cost to hire and train replacements would be $750,000. Say's trade name is well-known among fleet owners and is estimated to have a fair value of S200,000. The estimated remaining life was 4 years