The trial balances of Pep Co$.$ and Shep Co$.$ at January $20,2022$ are as follows $($in millions, with credit balances in parentheses$)$:

Immediately after creating these trial balances $($on January $20,2022),$ Pep pays $$800$ million cash to buy Shep Co$.$ Due to this

acquisition, Shep will cease to exist as a separate firm.

An analysis of Shep's assets and liabilities reveals that book values of some reported items do not reflect their market values at Jan.

$20,2022$: Inventories are overvalued by $$150$ million; Property, plant and equipment is overvalued by $$500$ million; Long$-$term debt

is overvalued by $$200$ million.

In addition, the following items are not currently reported on Shep's books, although Pep determines these have the fair values

listed here: Favorable lease agreements, valued at $$150$ million; Skilled work force $($great accounting staff!$),$ valued at $$250$ million;

In$-$process research and development, valued at $$200$ million; Favorable press reviews on Shep's products, valued at $$100$ million.

There are also lawsuits pending against Shep. Shep thinks it will lose these lawsuits and has recognized a liability of $$100$ million to

account for them, but Pep believes that Shep will likely win them.

Q$14$: Assume that Pep paid $$500$ million in cash for Shep, rather than $$800$ million. Calculate the gain on bargain purchase.