RR Records Inc. acquired all of DD Studios’ voting shares on January 1, 20x1, for P280,000.

RR’s balance
sheet immediately after the combination contained the following balances: (see image 1) DD’s balance
sheet at acquisition contained the following balances: (see image 2) On the date of combination, the
inventory held by DD had a fair value of P170,000, and its buildings and recording equipment had a
value of P375, 000. Goodwill reported by DD resulted from a purchase of SS Enterprises in 20x1. SS was
liquidated and its assets and liabilities were brought onto DD’s books. compute the balance of Goodwill
to be reported in the consolidated balance sheet immediately after the acquisition
FV of subsidiary 280,000.00
FV of DD net assets:
Cash & receivables 40,000.00
Inventory 170,000.00
Bldgs. & equipments 375,000.00
Less: accounts payable 90,000.00
Notes payable 250,000.00
FV of net identifiable assets 245,000.00
Goodwill 35,000.00