Use the following information for questions:
On January 1, 2011, Stinton Inc. purchased 60% of Halston Co. for $60,000. There was no difference between the book value and fair market value of Halston’s net assets. At year-end management determined there had been no impairment in Goodwill since the purchase. The equity sections of the two balance sheets at acquisition were as follows:$\begin{array}{lrr}&\text { Stinton Inc.}&\text { Halston Co. }\
\text { Common shares } & \$ 100,000 & \$ 40,000 \
\text { Retained earnings } & 40,000 & 8,000
\end{array}$ During the year, Halston earned $10,000 and paid cash dividends of $2,000.
-The amount of non-controlling interest that would appear on the consolidated balance sheet at January 1, 2011 would be:

Question

Use the following information for questions: 
On January 1, 2011, Stinton Inc. purchased 60% of Halston Co. for $60,000. There was no difference between the book value and fair market value of Halston’s net assets. At year-end management determined there had been no impairment in Goodwill since the purchase. The equity sections of the two balance sheets at acquisition were as follows:$\begin{array}{lrr}&\text { Stinton Inc.}&\text { Halston Co. }\
\text { Common shares } & \$ 100,000 & \$ 40,000 \
\text { Retained earnings } & 40,000 & 8,000
\end{array}$ During the year, Halston earned $10,000 and paid cash dividends of $2,000.
-The amount of non-controlling interest that would appear on the consolidated balance sheet at January 1, 2011 would be:

Quizplus · Accepted Answer

The non-controlling interest is 40% of Halston's net assets, which is $16,000 (40% x $40,000). However, since Halston earned $10,000 during the year, the non-controlling interest's share of the earnings is $4,000 (40% x $10,000). This increases the non-controlling interest to $20,000 ($16,000 + $4,000). However, Halston paid cash dividends of $2,000, which reduces the non-controlling interest to $19,200 ($20,000 - $2,000).

Use the Following Information for Questions: on January 1

Use the Following Information for Questions:
on January 1