Reference no: EM132919927

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.

Problem 1: What is the noncontrolling interest's share of Rockne's 2021 income?

Problem 2: Doone's 2021 consolidation entries required by the intra-entity inventory transfers.