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On January 1, 2019, John Doe Enterprises (JDE) acquired a 70% interest in Bubba Manufacturing, Inc. (BMI). JDE paid for the transaction with $588,000 cash. At the time of the acquisition, JDE determined that equipment was undervalued by $20,000 (5 yr life), and a building was undervalued by $18,000 (6 yr life). Any remaining consideration transferred over book value is assigned to goodwill.

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

The following account balances are for the year ending December 31, 2019 for both companies.

Accounts	John Doe	Bubba
Revenues	(925,000)	(425,000)
Cogs	615,000	286,000
Operating & interest expense	185,400	67,000
Equity in earnings	(45,500)
Separate company net income	(170,100)	(72,000)
Retained Earnings 1/1	(525,000)	(465,000)
Net Income	(170,100)	(72,000)
Dividends paid	65,000	32,000
Retained Earnings 12/31	(630,100)	(505,000)
Cash & A/R	146,000	135,000
Inventory	255,000	312,500
Investment in Brey	611,100
Land and buildings - net	431,400	246,800
Equipment - net	352,000	178,200
Total Assets	1,795,500	872,500
Liabilities	(718,000)	(71,000)
Common Stock	(447,400)	(296,500)
Retained Earnings 12/31	(630,100)	(505,000)
Total Liab. and SE	(1,795,500)	(872,500)

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

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