acquired 80 percent of the outstanding voting stock of Rockne Company for $592,000 consideration. At the acquisition date, the fair value of the 20 percent noncontrolling interest was $148,000 and Rockne's assets and liabilities had a collective net fair value of $740,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $260,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $320,000 in 2017 and $420,000 in 2018. Approximately 30 percent of the inventory purchased during any one year is not used until the f
acquired 80 percent of the outstanding voting stock of Rockne Company for $592,000 consideration. At the acquisition date, the fair value of the 20 percent noncontrolling interest was $148,000 and Rockne's assets and liabilities had a collective net fair value of $740,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $260,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $320,000 in 2017 and $420,000 in 2018. Approximately 30 percent of the inventory purchased during any one year is not used until the f
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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On January 1, 2017, Doone Corporation acquired 80 percent of the outstanding voting stock of Rockne Company for $592,000 consideration. At the acquisition date, the fair value of the 20 percent noncontrolling interest was $148,000 and Rockne's assets and liabilities had a collective net fair value of $740,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $260,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $320,000 in 2017 and $420,000 in 2018. Approximately 30 percent of the inventory purchased during any one year is not used until the following year.
- What is the noncontrolling interest's share of Rockne's 2018 income?
- Prepare Doone's 2018 consolidation entries required by the intra-entity inventory transfers.
Transcribed Image Text:Consolidation
Worksheet Entries
1
2 3
Prepare entry *G
Note: Enter debits before credits.
Transaction
Accounts
Debit
Credit
1
Transcribed Image Text:On January 1, 2017, Doone Corporation acquired 80 percent of the outstanding voting stock of Rockne Company for $592,000
consideration. At the acquisition date, the fair value of the 20 percent noncontrolling interest was $148,000 and Rockne's assets and
liabilities had a collective net fair value of $740,000. Doone uses the equity method in its internal records to account for its investment
in Rockne. Rockne reports net income of $260,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone
at 25 percent more than cost. Sales to Doone amounted to $320,000 in 2017 and $420,000 in 2018. Approximately 30 percent of the
inventory purchased during any one year is not used until the following year.
a. What is the noncontrolling interest's share of Rockne's 2018 income?
b. Prepare Doone's 2018 consolidation entries required by the intra-entity inventory transfers.
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Required B
What is the noncontrolling interest's share of Rockne's 2018 income?
Noncontrolling interest's
share
$
50,800
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