Dok Company acquired a 30 percent interest in Oak on January 1 for $1,000,000 cash. Assume the cost of the investment equals the fair value of Oak's net assets. Dok assigned the $250,000 fair value over book value of the interest acquired to the following assets:
Inventories ...................... $50,000 (sold in the current year)
Building ......................... $100,000 (4-year remaining life at January 1)
Goodwill ........................ $100,000
During the year Oak reported net income of $400,000 and paid $100,000 dividends.
Required
1. Determine Dok's income from Oak for the year.
2. Determine the December 31 balance of the Investment in Oak account.