On January 1, 2022, Pronto Company acquired 80 percent of Speedy Inc.s voting stock for $5,200,000. The fair value of the 20 percent noncontrolling interest was $800,000. Speedys net assets were reported at amounts approximating book value, but Pronto determined that Speedy had the following previously unreported intangible assets:

Developed technology, fair value $1,000,000, 5-year life Favorable leases, fair value $500,000, 4-year life

Speedys shareholders equity on January 1, 2022, was $5,000,000. It is now December 31, 2023 (two years later). Speedy reported net income of $400,000 in 2022. There are no impairments of identifiable intangibles or goodwill in 2022 or 2023. Pronto uses the complete equity method to report its investment in Speedy on its own books. Speedys December 31, 2023, trial balance appears below.

	Dr (Cr)
Current assets	$10,000,000
Property and equipment, net	25,000,000
Liabilities	(29,000,000)
Capital stock	(1,000,000)
Retained earnings, January 1	(4,400,000)
Sales revenue	(35,000,000)
Cost of goods sold	30,000,000
Operating expenses	4,400,000
	$0

1 At December 31, 2022 (rst year following the acquisition), eliminating entry (R) credits Prontos investment account by

a. $1,700,000

b. $1,200,000

c. $1,500,000

d. $4,000,000

2 What is the amount of the gain on acquisition, recognized by Pronto at the date of acquisition?

Select one:

a. $1,000,000

b. $0

c. $400,000

d. $500,000