4.All the issued and outstanding common stock of Manila Company were bought by Makati Company on October 1, 2011 for P700,000. The assets and liabilities of Manila Company were:

Cash

P 50,000

Accts. receivable (net of P25,000 allowance

for doubtful accounts)

250,000

Inventory

150,000

Property $ equipment (net of P100,000

Allowance for depreciation)

300,000

Accounts/Notes Payable

130,000

On October 1, 2011 the fair vale of the following assets were as follows:

Accts. receivable (net)

P 235,000

Inventory

130,000

Property & equipment (net)

400,000

In September 2011, Manila Company decided to close down a small workshop with the loss of some jobs. The costs of closure are estimated at P20,000. No provision has been made at 1 October 2011.

The amount of goodwill as a result of the business combination should be:

A.

P-0-

C.

P 65,000

B.

35,000

D.

100,000