On January 1, 2020, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $384,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $256,000, and Rockne's assets and liabilities had a collective net fair value of $640,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $210,000 in 2021. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $270,000 in 2020 and $370,000 in 2021. Approximately 35 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 2021 income? b. Prepare Doone's 2021 consolidation entries required by the intra-entity inventory transfers.

On January 1, 2020, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $384,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $256,000, and Rockne's assets and liabilities had a collective net fair value of $640,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $210,000 in 2021. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $270,000 in 2020 and $370,000 in 2021. Approximately 35 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 2021 income? b. Prepare Doone's 2021 consolidation entries required by the intra-entity inventory transfers.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

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On January 1, 2020, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company
for $384,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was
$256,000, and Rockne's assets and liabilities had a collective net fair value of $640,000. Doone uses the equity
method in its internal records to account for its investment in Rockne. Rockne reports net income of $210,000 in
2021. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales
to Doone amounted to $270,000 in 2020 and $370,000 in 2021. Approximately 35 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 2021 income?
b. Prepare Doone's 2021 consolidation entries required by the intra-entity inventory transfers.

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