Reference no: EM132807276

On September 1, 2008, the business assets and liabilities of Amor and Bhea were as follows:

                                                  Amor            Bhea

Cash                                           P28,000       P62,000

Accounts receivable                      200,000       600,000

Inventories                                  120,000           200,000

Land                                             600,000               -

Building                                             -               500,000

Furniture and fixtures                          50,000       35,000

Other assets                                     2,000        3,000

Accounts Payable                           180,000        250,000

Notes Payable                                  200,000          350,000

Amor and Bhea agreed form a partnership contributing their respective assets and liabilities subject to the following agreements:

• Accounts receivable of P20,000 in Amor's books and P40,000 in Bhea's books are uncollectible.
• Inventories of P6,000 and P7,000 are obsolete in Amor's and Bhea's respective books.
• Other assets of P2,000 and P3,000 in Amor's and Bhea's respective books are to be written off.
• Accrue expenses of P2,000 and P5,000 in Amor's and Bhea's books are to be recognized.
• Goodwill is to be recognized to equalizer their capital accounts after the above adjustments.

Problem 1: The amount of goodwill to be recognized is