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 balance in Stinton's investment in Halston Co.account at December 31, 2011 was:

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 balance in Stinton's investment in Halston Co.account at December 31, 2011 was:

Quizplus · Accepted Answer

Stinton's investment in Halston account balance would increase by its share of Halston's net income and decrease by its share of Halston's dividends paid. Stinton owns 60% of Halston, so it would recognize 60% of Halston's $10,000 net income ($6,000) and 60% of Halston's $2,000 dividends ($1,200). The investment account would be adjusted as follows: Initial investment of $60,000 + $6,000 (share of net income) - $1,200 (share of dividends) = $64,800.

Use the Following Information for Questions: on January 1

Use the Following Information for Questions:
on January 1