Dogwood Manufacturing, Inc. (Dogwood) acquired 9,000 shares of Magnolia Transportation's (Magnolia) outstanding stock for $50 per share on January 1, 2009. The following facts relate to the acquisition: •Magnolia had 12,000 shares of common stock issued and outstanding. •Fair market values of all of Magnolia's assets and liabilities approximate their book value. However, some exceptions exist. On January 1, 2009, Magnolia had the following assets and liabilities on its balance sheet: •Magnolia's revenues for the year were $505,000, and its operating expenses were $405,000. For the year ended December 31, 2009, Dogwood had the following other assets and liabilities on its balance sheet: •Dogwood's revenues for the year were $2,500,000, and its operating expenses were $2,375,000. •On December 31, 2009, Magnolia owed Dogwood $45,000. In 3-5 pages, complete the following:

1. Calculate the fair value of the controlling interest and the noncontrolling interest in Magnolia as of January 1, 2009.

2. Prepare a schedule for allocating the excess of investment cost (fair value) over the book value.

3. Prepare a consolidation worksheet and journal entries for the initial consolidation.

4. Prepare the journal entries that are required at year-end to arrive at a consolidated balance sheet and income statement as of December 31, 2009.