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The following balance sheets were prepared for Avril Corp. and Blink Co. on January 1, 2007, just before they entered into a business combination. Avril

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The following balance sheets were prepared for Avril Corp. and Blink Co. on January 1, 2007, just before they entered into a business combination. Avril Corp. P 210,000 Cash Blink Co P5,000 NO.1 Accounts Receivable Merchandise Inventory Building and Equipment Accumulated Depreciation Goodwill Total Assets 75,000 200,000 400,000 (100,000) NO.2 20,000 50,000 100,000 (25,000) 50,000 P 200,000 P 785,000 Accounts Payable P 125,000 P 70,000 Bonds Payable 200,000 30,000 Common Stock P30 par value 210,000 P20 par value 50,000 Additional paid-in capital 50,000 10,000 Retained Earnings 200,000 40,000 Total Liabilities & P 785,000 P 200,000 Stockholders' Equity On that date, the fair market value of Blink's inventories and building and equipment were P78,000 and P124,000 respectively, while bonds payable has a fair value of P42,000. The fair values of all other asset and liabilities of Blink (except for goodwill) were equal to their book values. Avril Corp. acquired the net assets of Blink Co. by issuing 2,500 shares of its P30 par value common stock (current fair value P36 per share) and purchase price in cash amounting to P12,000. Contingent consideration that is determinable (probable and reasonably estimated) amounted to P2,000 (discounted value). Additional cash payment made by Avril Corp. in completing the acquisition were: Legal fee for contract of business combination, P8,000; Accounting and legal fees for SEC registration, P11,000; Printing costs of stock certificates, P6,000; Finder's fee, P7,000; Indiret cost, P5,000. As a result of the business combination, the amount of total assets in the books of Avril Company a. P1,016,000 b. P963,000 c. P967,000 d. P1,1012,000 As a result of the business combination, the amount of retained earnings in the books of Avril Company. a. P195,000 b.P193,000 c. P200,000 d.P240,000 NO.3

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