On January 1, 2011, 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, 2011. Prepare a consolidated worksheet for this business combination. Assume goodwill has been reviewed and there is no goodwill impairment. The following account balances are for the year ending December 31, 2011 for both companies. For internal reporting purposes, JDE employed the equity method to account for this investment.

What method is JDE using to account for its investment in Bubba? How do you know? Prepare a fair value analysis, allocation schedule, and consolidation worksheet with journal entries for this business combination. Assume goodwill has been reviewed and there is no goodwill impairment. There are no intra-company transactions.