P 14-1 Parent accounting under the equity method Pak purchased a 40 percent interest in Sco of Germany for $1,080,000 on January 1, 2016. The excess cost over book value is due to a patent with a 10-year amortization period. A summary of Sco’s net assets at December 31, 2015, and at December 31, 2016, after translation into U.S. dollars, is as follows:

Capital Stock Retained Earnings Equity Adjustment Net Assets December 31, 2015 $2,000,000 $400,000 $2,400,000 Net income 310,000 310,000 Dividends (192,000) (192,000)

Translation adjustment $212,000 212,000 December 31, 2016 $2,000,000 $518,000 $212,000 $2,730,000 Exchange rates for euros were $1.14 on January 1, 2016; $1.16 average for 2016; $1.15 when dividends were declared; and $1.18 at December 31, 2016. Sco had net assets of €4,000,000 at January 1, 2016; net income of €500,000 for 2016; and dividends of €300,000. It ended the year with net assets of €4,200,000. Sco’s functional currency is the euro.

REQuIRED 1. Calculate Pak’s income from Sco for 2016.