Required:

Prepare a 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 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 Value Land $1,700,000 $2,550,000 Buildings (seven-year remaining 2,700,000 3,400,000 life) Equipment (five-year remaining 3,700,000 3,300,000 life) For internal reporting purposes, JDE employed the equity method to account for this investment. The following account balances are for the year ending December 31, 2020 for both companies. $ Revenues Expenses Equity in income of Bubba Manufacturing Net income Retained earnings, January 1, 2020 Net income (above) Dividends paid Retained earnings, December 31, 2020 Current assets Investment in Bubba Manufacturing Land Buildings Equipment (net) Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings, December 31, 2020 (above) Total liabilities and stockholders' equity John Doe Enterprises $(298,000,000) 271,000,000 (4,361,500) $ (31,361,500) $ (2,500,000) (31,361,500) 5,000,000) $ (28,861,500) 30,500,000 13,161,500 1,500,000 5,600,000 3,100,000 $ 53,861,500 $ (3,100,000) 0 (2,900,000) (19,000,000) (28,861,500) $ (53,861,500) Bubba Manufacturing $(103,750,000) 95,800,000 0 (7,950,000) $ (100,000) (7,950,000) 3,000,000) $ (5,050,000) $ 20,800,000 0 1,700,000 2,360,000 2,960,000 $ 27,820,000 $ (4,900,000) (1,000,000) (6,000,000) (10,870,000) (5,050,000) $ (27,820,000)