Consolidated Financial Statements and Outside Ownership

On January 1, 2016, John Doe Enterprises (JDE) bought a 75% interest in Bubba Manufacturing, Inc. (BMI). JDE paid for the transaction with $1,207,149 cash and 442, 621 shares of JDE common stock (par value $1.00 per share). At the time of the acquisition, BMI's book value was $13,656,880.

On January 1, JDE stock had a market value of $25.85 per share and there was no control premium in this transaction. Any unidentifiable consideration transferred over book value is assigned to goodwill. BMI had the following balances on January 1, 2016.

Book Value Fair Value

Land.......................................................................................1, 207, 149..............2, 615, 490

Buildings (seven-year remaining life).................................1, 609, 532..............3, 098, 349

Equipment (five-year remaining life)...................................2, 816, 681..............2, 655, 728

For internal reporting purposes, JDE employed the equity method to account for this investment.

Required: Prepare a consolidation worksheet for this business combination. Assume goodwill has been reviewed and there is no goodwill impairment.

John Doe Enterprise & Bubba Manufacturing Consolidation Worksheet For the year ended 12/31/2016 Non- John Doe Bubba Consolidated Consolidation Entries Controlling Ent. MFG. Debit Credt Interest Totals Accounts (239 284) (83,494,478) Revenues 218,091,601 Expenses (4,663,044) Equity in income of Bubba, MFG. 0 Separate company net income 26391.727 6397.890) 1 Consolidated net income 3 Noncontrolling interest in Bubba's income 4 Net income to controlling interest 6 Retained earnings, January 1, 2016 (2,011,915) (80,477) (26,391,728) 7 Net income 4,023,830 8 Dividends paid 9 Retained earnings, December 31, 2016 (24.379813) 4,064,0691 1 Current assets 16,739,134 20,789,119 2 Investment in Bubba 15,501,231 1,368,102 5 Land 4,506,690 1,899,248 6 Buildings (net) 2,382,108 2,494,775 7 Equipment (net 8 Goodwi 44,498,964 9 Total assets 22,388,592 (3,943,354) 1 Current Liabilities (2,494,775) 2 Notes payable (804,766) 3 NCI in Bubba 1/1 5 NCI in Bubba 12/31 6 Common Stock (2,333,822) (4,828,596) (15,290,555) (8,747,807) 7 Additional paid-in capital 8 Retained earnings, December 31,2016 24,379,813 4.064.069 Total Liabilities and Stockholders' Ec 44,498,965 22,388,592 John Doe Enterprise & Bubba Manufacturing Consolidation Worksheet For the year ended 12/31/2016 Non- John Doe Bubba Consolidated Consolidation Entries Controlling Ent. MFG. Debit Credt Interest Totals Accounts (239 284) (83,494,478) Revenues 218,091,601 Expenses (4,663,044) Equity in income of Bubba, MFG. 0 Separate company net income 26391.727 6397.890) 1 Consolidated net income 3 Noncontrolling interest in Bubba's income 4 Net income to controlling interest 6 Retained earnings, January 1, 2016 (2,011,915) (80,477) (26,391,728) 7 Net income 4,023,830 8 Dividends paid 9 Retained earnings, December 31, 2016 (24.379813) 4,064,0691 1 Current assets 16,739,134 20,789,119 2 Investment in Bubba 15,501,231 1,368,102 5 Land 4,506,690 1,899,248 6 Buildings (net) 2,382,108 2,494,775 7 Equipment (net 8 Goodwi 44,498,964 9 Total assets 22,388,592 (3,943,354) 1 Current Liabilities (2,494,775) 2 Notes payable (804,766) 3 NCI in Bubba 1/1 5 NCI in Bubba 12/31 6 Common Stock (2,333,822) (4,828,596) (15,290,555) (8,747,807) 7 Additional paid-in capital 8 Retained earnings, December 31,2016 24,379,813 4.064.069 Total Liabilities and Stockholders' Ec 44,498,965 22,388,592