The stockholders' equity of Son Corporation at December 31, 2015, was as follows (in thousands):
12% preferred stock, cumulative, nonparticipating, $100 par, callable at $105 ..... $1,200
Common stock, $10 par ..................................................................... 2,000
Other paid-in capital ......................................................................... 280
Retained earnings ............................................................................ 1,520
Total stockholders' equity .................................................................. $5,000
Pop Corporation purchased 80 percent of Son's common stock on January 2, 2016, for $3,072,000. During 2016, Son reported a $200,000 net loss and paid no dividends. During 2017, Son Corporation reported $1,000,000 net income and declared dividends of $688,000. Any excess fair value is due to goodwill.
REQUIRED:
1. Compute the fair value/book value differential from Pop's investment in Son.
2. Determine Pop's income (loss) from Son for 2016.
3. Determine Pop's income (loss) from Son for 2017.
4. Compute the balance of Pop's Investment in Son account on December 31, 2017.