Use the Following Information for Questions:
on January 1

question 38

Multiple Choice

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.
-Determine Stinton Inc.'s equity in Halston's earnings for 2011.

• A)$1,200
• B)$4,800
• C)$6,000
• D)$8,000

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