3.

Small Company reported 207 net income of $51,000 and paid dividends of $19,000 during the year. Mock Corporation acquired 30 percent of Small's shares on January 1, 207, for $96,000. At December 31,207, Mock determined the fair value of the shares of Small to be $128,000. Mock reported operating income of $80,000 for 207. Required: Compute Mock's net income for 207 assuming it a. Carries the investment in Small at fair value. b. Uses the equity method of accounting for its investment in Small