Hello, could you explain this problem to me please? I have the answer listed below. Thank you!

Pinehollow acquired 70% of the outstanding stock of Stonebriar by issuing 70,000 shares of its $1 par value stock. The shares have a fair value of $13 per share. Pinehollow also paid $25,000 in direct acquisition costs. Prior to the transaction, the companies have the following balance sheets: Assets Cash Accounts receivable Inventory Property, plant, and equipment (net) Total assets Pinehollow $ 150,000 500,000 900,000 1,850,000 $3,400,000 Stonebriar $50,000 350,000 600,000 900,000 $1.900,000 Liabilities and Stockholders' Equity Current liabilities Bonds payable Common stock ($1 par) Paid-in capital in excess of par Retained earnings Total liabilities and equity $ 300,000 1,000,000 300,000 800,000 1,000,000 $3,400,000 $ 100,000 600,000 100,000 900,000 200.000 $1,900,000 The fair values of Stonebriar's inventory and plant, property and equipment are $700,000 and $1,000,000, respectively. 4. In the consolidation worksheet right after the acquisition, Pinehollow would recognize a. Goodwill of $70,000 b. Goodwill of $100,000 c Gains on acquisition of subsidiary $70,000 d. Gains on acquisition of subsidiary $100,000 Correct answer:C) Gains on acquisition of subsidiary $70,000