The following is a summary of the statement of financial position of Stratification Company showing data regarding the carrying values and fair values as of December 31, 2011:

Statement of Financial Position Item Book Value Fair Value

Cash P70,000 P70,000

Trade and other Receivables 125,000 125,000

Merchandise Inventory 80,000 140,000

Land 62,500 90,500

Buildings and Machinery 500,000 443,250

Accumulated Depreciation (187,500)

Total Assets P650,000 P868,750

Trade and other Payables P12,500 P12,500

Bonds Payable 200,000 180,000

Ordinary Share Capital (P5 par value) 187,500

Share Premium 87,500

Accumulated Profits 162,500

Total Liabilities and Equities P650,000

On January 1, 2012, Permutation Corporation entered into a business combination agreement by issuing 15,000 shares of its P10 par value ordinary share capital in exchange for the net assets of Stratification Company.As of this date, the shares of Stratification were selling at P18 per share while that of the Permutation were selling at P50 per share.

Permutation Corporation in carrying out the business combination agreement incurred the following additional cash payments:

Consultancy fee paid to broker that located StratificationP12,500

Legal fee for stock issued by Permutation3,750

Share issue cost of new shares of Permutation6,250

General and administrative expenses11,250

Cost of SEC registration of Permutation shares1,250

Required:

Prepare all indicated entries to record the acquisition on the books of Permutation Corporation.