Business, 25.02.2020 21:59 reneebrown017

On January 1, 2017, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $300,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $200,000 and Rockne's assets and liabilities had a collective net fair value of $500,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $160,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $250,000 in 2017 and $300,000 in 2018. Approximately 30 percent of the inventory purchased during any one year is not used until the following year.
Required:
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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On January 1, 2017, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne...

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