Reference no: EM132419081

Problem: On January 1, 2017, Nora Corporation acquired 60 percent of the outstanding voting stock of Roxane Company for $564,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $376,000 and Roxane's assets and liabilities had a collective net fair value of $940,000. Nora uses the equity method in its internal records to account for its investment in Roxane. Roxane reports net income of $360,000 in 2018. Since being acquired, Roxane has regularly supplied inventory to Nora at 25 percent more than cost. Sales to Nora amounted to $420,000 in 2017 and $520,000 in 2018. Approximately 35 percent of the inventory purchased during any one year is not used until the following year.

Required:

Question 1: What is the noncontrolling interest's share of Roxane's 2018 income?

Question 2: Prepare Nora's 2018 consolidation entries required by the intra-entity inventory transfers.