The following are the financial statements of Pembina Corp and Shore Acres Inc. prepared on December 31, 2020:2020 INCOME STATEMENTS

PembinaShore Acres

Misc. revenues925,000270,000

Interest revenue3,600

Dividend revenue12,000_

$937,000$273,600

Misc. expenses736,400229,600

Interest expense3,600

Income tax expense80,00020,000

$820,000249,600

Net income$117,000$24,000

2020 RETAINED EARNINGS STATEMENTS

Bal, Jan 1$153,000$72,000

Net income117,00024,000

289,80096,000

Dividends50,00015,000

Bal. Dec 31$220,000$81,000

BALANCE SHEETS - December 31, 2020

Misc. Assets$527,000$211,000

Note Receivables60,000

Investment in Shore Acres65,000-------

$592,000$271,000

Misc. Liabilities$212,000$140,000

Note Payable60,000

Common Shares100,00050,000

Retained Earnings220,00081,000

$592,000$271,000

Other information:

1.Pembina acquired 80% of Shore Acres on January 1, 2019 at a cost of $65,000.On this date Shore Acres retained earnings amounted to $10,000, and the acquisition differential was entirely allocated to goodwill.Impairment tests conducted yearly since acquisition yielded a loss of $5,000 in 2019 and a further loss of $3,500 in 2020.

Pembina uses the cost method to account for the investment.

Use the entity theory for calculations. (FVE)

2.The December 31, 2020 inventory of Pembina contained purchases made from Shore Acres amounting to $15,000.Shore Acres sells to Pembina at a 35% gross profit.

3.On July 1, 2020 Pembina borrowed $60,000 from Shore Acres and signed a note bearing interest at 12% per year.

4.Both companies pay income tax at a rate of 40%.

REQUIRED:

Calculate the balance in the "Investment in Shore Acres" account as at December 31, 2020, if Pembina had used the equity method.