Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2020, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $528,000 consideration. At the acquisition date, the

On January 1, 2020, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $528,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $352,000, and Rockne's assets and liabilities had a collective net fair value of $880,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $330,000 in 2021. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $390,000 in 2020 and $490,000 in 2021. Approximately 35 percent of the inventory purchased during any one year is not used until the following year.

  1. What is the noncontrolling interest's share of Rockne's 2021 income?
  2. Prepare Doone's 2021 consolidation entries required by the intra-entity inventory transfers.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Hospitality Financial Accounting

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Agnes L.

2nd Edition

9780470598092, 470083603, 978-0470083604

More Books

Students also viewed these Accounting questions