Pinehollow acquired 80% of the outstanding stock of Stonebriar by issuing 80,000 shares of its $1 par value stock. The shares have a fair value of $15 per share. Pinehollow also paid $25,000 in direct acquisition costs. Prior to the transaction, the companies have the following balance sheets:

Assets

Pinehollow

Stonebriar

Cash

$ 150,000

$ 50,000

Accounts receivable

500,000

350,000

Inventory

900,000

600,000

Property, plant, and equipment (net)

1,850,000

900,000

Total assets

$3,400,000

$1,900,000

Liabilities and Stockholders' Equity

Current liabilities

$ 300,000

$ 100,000

Bonds payable

1,000,000

600,000

Common stock ($1 par)

300,000

100,000

Paid-in capital in excess of par

800,000

900,000

Retained earnings

1,000,000

200,000

Total liabilities and equity

$3,400,000

$1,900,000

The fair values of Stonebriar's inventory and plant, property and equipment are $700,000 and $1,000,000, respectively. What is the amount of goodwill that will be included in the consolidated balance sheet immediately following the acquisition?

a.

$300,000

b.

$100,000

c.

$200,000

d.

$240,000