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: Equity Adjustment Capital Stock $2,000,000 December 31, 2015 Net income Dividends Translation adjustment December 31, 2016 Retained Earnings $400,000 310,000 (192,000) Net Assets $2,400,000 310,000 (192,000) 212,000 $2,730,000 $2,000,000 $518,000 $212,000 $212,000 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 Janu- ary 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. 2. Determine the balance of Pak's Investment in Sco account at December 31, 2016. 3. Develop a proof of your calculation of the Investment in Sco account balance at December 31, 2016