MountainTop PE, a private equity firm, is finalizing the acquisition of AlpineGear Co., a high-end ski equipment manufacturer. The purchase consideration agreed upon is $750 million. The book value of AlpineGear Co. is $500 million. During the purchase price allocation process, MountainTop PE identified undervalued patents worth an additional $100 million and an off-balance-sheet liability worth $50 million. How should MountainTop PE allocate goodwill on the pro forma balance sheet of AlpineGear Co. post-acquisition?

• MountainTop PE should recognize goodwill of $250 million, which is the difference between the purchase consideration and the adjusted book value.
• MountainTop PE should recognize goodwill of $200 million, taking into account the adjusted fair values of the patents and the off-balance-sheet liability.
• MountainTop PE should recognize goodwill of $150 million, by deducting both the undervalued patents and the off-balance-sheet liability from the excess of the purchase price over book value.
• MountainTop PE should not recognize any goodwill, as the adjustments to patents and liabilities balance out the premium paid over the book value.