On January 1, 2020, John Doe Enterprises (JDE) acquired a 55% interest in Tractors-R-Us Manufacturing, Inc. (TMI). 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, TMI's book value was $16,970,000.

On January 1, JDE stock has 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. TMI had the following balances on January 1, 2020.

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

1. Prepare a schedule to determine goodwill, and the amortization and allocation amounts.

2. Prepare the consolidating entries and the consolidation worksheet for this business combination. Assume goodwill has been reviewed and there is no goodwill impairment.

On January 1, 2020, John Doe Enterprises (JDE) acquired a 55% interest in Tractors-R-Us Manufacturing, Inc. (TMI). 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, TMI'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. TMI had the following balances on January 1, 2020. Book Value Value Land $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 Fair For internal reporting purposes, JDE employed the equity method to account for this investment. 1. Prepare a schedule to determine goodwill, and the amortization and allocation amounts. The following account balances are for the year ending December 31, 2020 for both companies. John Doe Enterprises S(298,000,000) 271,000,000 ( 4,361,500) $(31.361,500) Tractors-R-Us Manufacturing $(103,750,000) 95,800,000 Revenues Expenses Equity in income-Tractors-R-UsManufacturing Net income SC 7.950,000) Retained earnings, January 1, 2020 Net income (above) Dividends paid Retained earnings, December 31, 2020 $( 2,500,000) ( 31,361,500) 5.000.000 $( 28,861,500 $ 100.000) ( 7,950,000) 3.000.000 SC 5,050,000) $ 20,800,000 Current Assets Investment in Tractor Manufacturing Land Buildings Equipment (net) Total assets $ 30,500,000 13,161,500 1,500,000 5,600,000 3.100,000 $ 53.861,500 1,700,000 2,360,000 2.960,000 27.820,000 $ $( 3,100,000) Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings, Dec. 31, 2020 (above) Total liabilities and stockholders' equity 2,900,000) (19,000,000) 28,861,500 S (53,861,500) $ (4,900,000) ( 1,000,000) C 6,000,000) ( 10.870,000) 5,050,000) $( 27.820.000) 2. Prepare the consolidating entries and the consolidation worksheet for this business combination. Assume goodwill has been reviewed and there is no goodwill impairment