Determine Dok income from Oak

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Question - Dok Company acquired a 30 percent interest in Oak on January 1 for $2,000,000 cash. Assume the cost of the investment equals the fair value of Oak's net assets. Dok assigned the $500,000 fair value over book value of the interest acquired to the following assets:

Inventories $100,000 (sold in the current year)

Building $200,000 (4-year remaining life at January 1)

Goodwill $200,000

During the year Oak reported net income of $800,000 and paid $200,000 dividends

Required -

a. Determine Dok's income from Oak.

b. Determine the December 31 balance of the Investment in Oak account.

Reference no: EM132956019

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