4 On January 1, 2016 at acquisition date, Johns Enterprises acquired 80 percent of Stay Companys outstanding common shares in exchange for $500000 cash.

On January 1, 2016 Stays books showed assets of $400000 and liabilities of $100000 and the equity consists from:

Common stock 120000

Additional paid-in capital 80000

Retained earnings 100000

The recorded assets and liabilities had fair values equal to their individual book values except that a building (10-year remaining life) with book value of $100,000 had an appraised fair value of $125,000. Also, at acquisition date Stayer possessed unrecorded customer list (zero book value) with an estimated fair value of $50000 and a 20-year remaining life.

For 2016 Johns reported net income of $200,000 (before recognition of Stayers income), and Stayer separately reported income of $90,000. During 2016, Johns declared dividends of $40,000 and Stayer declared $50,000 in dividends.

What is the consolidated net income for the year 2018? 4 marks

Recorded Elimination and Adjusting Entries on 31/12/2016? (11 marks)

Answer Question 4