On March 1, 2010, JJ Corporation acquired for P 5,600,000 all of the assets of ZZ Company. On this date, the carrying value of ZZs identifiable assets was P4, 600,000. The current value of ZZs inventory was P800, 000 less than its carrying value, and the current fair value of ZZs plant assets was P1, 600,000 larger than its carrying amount. The current fair values of other identifiable net assets of ZZ were equal to their carrying values.

The journal entry prepared by JJ to record the business combination includes a

a. Debit of P 200,000 to goodwill.

b. Debit of P 800,000 to inventories

c. Debit of P 1,400,000 to goodwill

d. Credit of P 1,600,000 to plant assets