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H1-2 Apple Corporation issued 6,000 shares of its $2 par value common stock at a market price of $10 per share to acquire all the
H1-2 Apple Corporation issued 6,000 shares of its $2 par value common stock at a market price of $10 per share to acquire all the outstanding common stock of Barry Corporation. Apple paid $5,000 of legal fees for this business combination and $3000 for issuing the securities. Barry was merged into Apple and dissolved. Information for Barry Corporation immediately before the merger is as follows: Book value Fair value Cash 6.000 6,000 Receivables 14,000 13,000 Equipment 50,000 45,000 10.000 Total 70,000 74,000 Accounts payable 25,000 25,000 Common stock 2,000 Add paid-in capital 14,000 Retained earnings 29.000 Total 70,000 Same information as H1-2 except that Apple issued 5,000 shares of its common stock at a price of $8.50 acquire all the outstanding common stock of Barry Corporation. Determine the gain from bargain purchase reported by Apple for the business combination
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