On January 1, 2011, John Doe Enterprises (JDE) Acquired a 55

Essay

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. $\begin{array}{lrr}&\text { Book } & \text { Fair } \\&\text { Value } & \text { Value } \\\text { Land } & \$ 1,700,000 & \$ 2,550,000 \\\text { Buildings (seven-year remaining life) } & 2,700,000 & 3,400,000 \\\text { Equipment (five-year remaining life) } & 3,700,000 & 3,300,000\end{array}$ For internal reporting purposes, JDE employed the equity method to account for this investment.
-Select True (T) or False (F) for each of the following statements: