Pay Corporation paid $480,000 cash for a 100 percent interest in Sap Corporation on January 1, 2012, when Sap's stockholders' equity consisted of $200,000 capital stock and $80,000 retained earnings. Sap's balance sheet on December 31, 2011, is summarized as follows (in thousands):

Pay uses the equity method to account for its interest in Sap. The amortization periods for the fair value/book value differentials at the time of acquisition were as follows:$20,000 .......... Undervalued inventories (sold in 2012)25,000 ................... Undervalued land90,000 .... Undervalued buildings (10-year useful life remaining)(15,000) .... Overvalued equipment (5-year useful life remaining)10,000 ........... Other liabilities (2 years before maturity)70,000 ...................... GoodwillREQUIRED1. Prepare a journal entry on Sap's books to push down the values reflected in the purchase price.2. Prepare a balance sheet for Sap Corporation on January 1, 2012.3. Sap's net income for 2012 under the new push-down accounting system is $90,000. What is Pay's income from Sap for 2012?

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Fair Value Book Value $ 30 $ 30 Cash Accounts receivable-net 70 70 Inventories 80 Land 50 75 Buildings-net Equipment-net Total assets 100 190 90 75 $520 $400 $ 50 $ 50 $ 60 Accounts payable Other liabilities 70 200 80 $400 Capital stock Retained earnings Total equities