On January 1, 2020, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $348,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $232,000, and Rockne's assets and liabilities had a collective net fair value of $580,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $180,000 in 2021. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $240,000 in 2020 and $340,000 in 2021. Approximately 35 percent of the inventory purchased during any
On January 1, 2020, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $348,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $232,000, and Rockne's assets and liabilities had a collective net fair value of $580,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $180,000 in 2021. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $240,000 in 2020 and $340,000 in 2021. Approximately 35 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 2021 income?
- Prepare Doone's 2021 consolidation entries required by the intra-entity inventory transfers.
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