E$2-9$ Fair Value Method

Small Company reported $20$X$7$ net income of $$40,000$ and paid dividends of $$15,000$ during the

year. Mock Corporation acquired $20$ percent of Small$$s shares on January $1,20$X$7,$ for $$105,000.$

At December $31,20$X$7,$ Mock determined the fair value of the shares of Small to be $$121,000.$

Mock reported operating income of $$90,000$ for $20$X$7.$

Required

Compute Mock$$s net income for $20$X$7$ assuming it uses

a$.$ The cost method in accounting for its investment in Small.

b$.$ The equity method in accounting for its investment in Small.

c$.$ The fair value method in accounting for its investment in Small.