Pilgrim Corp. acquires all of the stock of Sonic Co. for $5 million in cash. Sonic's net assets had a book value of $3 million at the date of acquisition. The book values of Sonic's assets and liabilities approximate fair values, except that Sonic reports inventories at $900,000 mor than fair value an dplant assets at $2 million more than fair value. In addition, Sonic has unrecorded identifiable intangible assets with an estimated fair value of $5 million, apprproprieately capitalized according to GAAP. When recording its investment in Sonic, Pilgrim reports

-$0. No gain or goodwill resulting from the acquisition

-$100,000 gain resulting from the acquisition

-$1 million goodwill resulting from the acquisition

-$3,900,000 gain resulting from the acquisition

-$3,900,000 goodwill resulting from the acquisition