On January 1, 2020, John Doe Enterprises (JDE) acquired a 55% interest in Bubba Manufacturing, Inc. (BMI). JDE paid for the transaction with $3 million cash and 500,000 shares of JDE common stock (par value $1.00 per share). At the time of the acquisition, BMI's book value was $16,970,000.On January 1, JDE stock had a market value of $14.90 per share and there was no control premium in this transaction. Any consideration transferred over book value is assigned to goodwill. BMI had the following balances on January 1, 2020. Book Value Fair ValueLand$1,700,000 $2,550,000 Buildings (seven-year remaining life) 2,700,000 3,400,000 Equipment (five-year remaining life) 3,700,000 3,300,000 ??For internal reporting purposes, JDE employed the equity method to account for

Question

this investment. ?The following account balances are for the year ending December 31, 2020 for both companies.? John Doe Enterprises Bubba ManufacturingRevenues$(298,000,000) $(103,750,000)Expenses 271,000,000   95,800,000 Equity in income of Bubba Manufacturing (4,361,500)  0 Net income$(31,361,500) $(7,950,000)Retained earnings, January 1, 2020$(2,500,000) $(100,000)Net income (above) (31,361,500)  (7,950,000)Dividends paid 5,000,000)  3,000,000)Retained earnings, December 31, 2020$(28,861,500) $(5,050,000)Current assets$30,500,000  $20,800,000 Investment in Bubba Manufacturing 13,161,500   0 Land 1,500,000   1,700,000 Buildings 5,600,000   2,360,000 Equipment (net) 3,100,000   2,960,000 Total assets$53,861,500  $27,820,000 Accounts payable$(3,100,000) $(4,900,000)Notes payable 0   (1,000,000)Common stock (2,900,000)  (6,000,000)Additional paid-in capital (19,000,000)  (10,870,000)Retained earnings, December 31, 2020 (above) (28,861,500)  (5,050,000)Total liabilities and stockholders' equity$(53,861,500) $(27,820,000)?Required:?Prepare a consolidation worksheet for this business combination.  Assume goodwill has been reviewed and there is no goodwill impairment.

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Answer 1