Scenario 2-1 Pinehollow Acquired All of the Outstanding Stock of Stonebriar by Stonebriar

Multiple Choice

Scenario 2-1
Pinehollow acquired all of the outstanding stock of Stonebriar by issuing 100,000 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:
The fair values of Stonebriar's inventory and plant, property and equipment are $700,000 and $1,000,000, respectively.
-Refer to Scenario 2-1. Goodwill associated with the purchase of Stonebriar is ____.

A) $100,000
B) $125,000
C) $300,000
D) $325,000