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
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.

![**Case Study: Doone Corporation and Rockne Company Acquisition**
**Background:**
On January 1, 2017, Doone Corporation acquired 80 percent of the outstanding voting stock of Rockne Company for $592,000 as consideration. At the acquisition date, the fair value of the 20 percent noncontrolling interest was $148,000. Rockne Company's assets and liabilities had a collective net fair value of $740,000 at that time. Doone Corporation uses the equity method in its internal records to account for its investment in Rockne Company.
**Financial Data for 2018:**
- Rockne reported a net income of $260,000 in 2018.
- Since the acquisition, Rockne has regularly supplied inventory to Doone, priced 25 percent above cost.
- Sales to Doone amounted to $320,000 in 2017 and $420,000 in 2018.
- Approximately 30 percent of the inventory purchased in a given year is held over to the following year.
**Questions:**
a. What is the noncontrolling interest's share of Rockne's 2018 income?
b. Prepare Doone's 2018 consolidation entries required for the intra-entity inventory transfers.
**Answer to Question (a):**
The noncontrolling interest's share of Rockne's 2018 income is calculated as follows:
\[ \text{Noncontrolling Interest Share} = \text{Net Income} \times \text{Noncontrolling Interest Percentage} \]
\[ \text{Noncontrolling Interest Share} = \$260,000 \times 20\% \]
\[ \text{Noncontrolling Interest Share} = \$260,000 \times 0.20 \]
\[ \text{Noncontrolling Interest Share} = \$52,000 \]
However, the transcription specifies a final figure:
\[ \boxed{\$50,800} \]
This indicates there might be adjustments or specific considerations applied that altered the straightforward calculation.
**Answer to Question (b):**
The answer to part B is not provided in the provided text.
**Diagram Explanation:**
- **Tab Layout:** The tabs are provided for the two parts of the question, labeled as "Required A" and "Required B." Only "Required A" is shown selected, indicating the noncontrolling interest's share.
- **Noncontrolling Interest Share Calculation Box:** This box shows the final computation ($50](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F40b4aa67-853f-42db-a2ef-3f791b1a253f%2F34953f54-7ad3-4574-8f46-c79a62aac6a1%2Fhqafbv_processed.png&w=3840&q=75)

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