On December 31, Year 1, Damon Co. purchased 100% of the outstanding common stock of Smith Co. in an acquisition

On December 31, Year 1, Damon Co. purchased 100% of the outstanding common stock of Smith Co. in an acquisition by issuing 20,000 shares of its $1 par common stock that had a fair value of $10 per share, and transferring cash of $10,000. Damon also incurred $15,000 in direct acquisition costs for due diligence services. On the acquisition date, Smith had assets with a book value of $200,000, a fair value of $350,000, and related liabilities with a book and fair value of $70,000. Ignoring tax effects, what is the total effect of this transaction on the Year 1 net income reported by Damon Co.

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