On June 30, 2020, Pearl Co. acquired 80% of the outstanding shares of Scott Co. for P3,125,000. On this date Pearl Co.’s net assets had book value of P5,000,000 but with a fair value of P4,062,500....

On June 30, 2020, Pearl Co. acquired 80% of the outstanding shares of Scott Co. for P3,125,000. On
this date Pearl Co.’s net assets had book value of P5,000,000 but with a fair value of P4,062,500. The
liabilities of Scott Co have a book and fair value of P250,000. Pearl Co. paid P62,500 to a CPA Lawyer who facilitated the combination. The fair value of the non-controlling interest on this date was P750,000.

Compute the goodwill (gain from bargain price) arising from the above combination

a. P62,500
b. P75,000
c. P(62,500)
d. P(125,000)