Question $1$

On May $1,$ Beta Co$.$ reported the following account balances along with

their estimated fair values:

On that day, Alpha paid cash $$743,800$ to acquire all of the assets and

liabilities of Beta, which will cease to exist as a separate entity. To facilitate

the merger, Alpha also paid $$101,500$ to an investment banking firm.

The following information was also available:

Alpha further agreed to pay an extra $$81,400$ to the former owners of

Beta only if they meet certain revenue goals during the next two years.

Alpha estimated the present value of its probability adjusted expected

payment for this contingency at $$40,700.$

Beta has a research and development project in process with an

appraised value of $$210,500.$ However, the project has not yet reached

technological feasibility and the project's assets have no alternative

future use.

In recording acquisition of Beta, Alpha would record gain on bargain

purchase of:

$$36,200.$

$$0$

$$58,700.$

$$18,000.$