Check my work On January 1, 2017, Doone Corporation acquired 80 percent of the o

Question

Check my work On January 1, 2017, Doone Corporation acquired 80 percent of the outstanding voting stock of Rockne Company for $640,000 consideration. At the acquisition date, the fair value of the 20 percent nencontrol fair value of $800,000. Doone uses the equity method in its internal records to account forit investment in Rockne. Rockne reports net income of $290.000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than c amounted to $350,000 in 2017 and $450,000 in 2018. Approximately 30 percent of the inventory lling interest was $160,000 and Rockne's assets and liabilities had a collective net ost. Sales to Doone purchased during any one year is not used until the following year 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. Complete this question by entering your answers in the tabs below. Required A Required B What is the noncontrolling interest's share of Rockne's 2018 income? oncontrolling interest's share Required A Required B

Explanation / Answer

Part A)

The value of noncontrolling interest's share of Rockne's 2018 income is determined as below:

_____

Part B)

The journal entries are prepared as below:

_____

Notes:

The gross profit percentage is calculated as below:

Gross Profit Percentage = Markup Percentage/(1+Markup Percentage) = 25%/(1+25%) = 20%

Net Income of Subsidiary 170,000 Add 2017 Intra Entity Gross Profit Realized in 2018 (230,000*30%*20%) 13,800 Less 2018 Intra Entity Gross Profit Deferred (330,000*30%*20%) -19,800 Realized Income of Subsidiary 164,000 Non Controlling Interests Share of Net Income (164,000*20%) $32,800

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