Compute for the Total Shareholders Equity to be presented in the consolidated statement of financial position at the date of business combination:

A. P7,000,000 B. P7,500,000 C. P8,200,000 D. P8,000,000

The correct answer is A. P7,000,000. Kindly provide a solution on how to arrive at that answer. Thank you!

Better Company has gained control over the operations of Calm Corporation by acquiring 85% of its outstanding capital stock for P2,580,000. This amount includes a control premium of P30,000. Acquisition expenses, direct and indirect amounted to P83,000 and P42,000 respectively. Better Calm Book Value Book Value Fair Value Cash P3,541,500 P128,000 Accounts receivable 300,000 325,000 Inventories 550,000 360,000 Prepaid expenses 148,500 125,000 Land 2,350,000 879,000 Building 1,560,000 558,000 Equipment 300,000 185,000 Goodwill 300,000 Total Assets P8,750,000 P2,860,000 Accounts Payable Notes payable Capital stock, 50 par Additional paid in capital Retained earnings Total equities 675,000 1,400,000 3,400,000 1,575,000 1,700,000 P8,750,000 253,000 730,000 800,000 600,000 477,000 P2,860,000 The following was ascertained on the date of acquisition for Calm Corporation: The value of receivables and equipment has decreased by P25,000 and P14,000 respectively. The fair value of inventories is now P436,000 whereas the value of land and building has increased by P471,000 and P107,000 respectively. There was an unrecorded accounts payable amounting to P27,000 and the fair value of notes is P738,000. Better Company has gained control over the operations of Calm Corporation by acquiring 85% of its outstanding capital stock for P2,580,000. This amount includes a control premium of P30,000. Acquisition expenses, direct and indirect amounted to P83,000 and P42,000 respectively. Better Calm Book Value Book Value Fair Value Cash P3,541,500 P128,000 Accounts receivable 300,000 325,000 Inventories 550,000 360,000 Prepaid expenses 148,500 125,000 Land 2,350,000 879,000 Building 1,560,000 558,000 Equipment 300,000 185,000 Goodwill 300,000 Total Assets P8,750,000 P2,860,000 Accounts Payable Notes payable Capital stock, 50 par Additional paid in capital Retained earnings Total equities 675,000 1,400,000 3,400,000 1,575,000 1,700,000 P8,750,000 253,000 730,000 800,000 600,000 477,000 P2,860,000 The following was ascertained on the date of acquisition for Calm Corporation: The value of receivables and equipment has decreased by P25,000 and P14,000 respectively. The fair value of inventories is now P436,000 whereas the value of land and building has increased by P471,000 and P107,000 respectively. There was an unrecorded accounts payable amounting to P27,000 and the fair value of notes is P738,000