Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $6,121,000 incash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. Atthe acquisition date, Mathias’s stockholders’ equity was $2,070,000including retained earnings of $1,570,000.

At the acquisition date, Allison prepared the following fairvalue allocation schedule for its newly acquired subsidiary:

Consideration transferred					$	6,121,000
Mathias stockholders'equity						2,070,000
Excess fair over bookvalue					$	4,092,000
to unpatented technology(8-year remaining life)	$	912,000
to patents (10-year remaininglife)		2,640,000
to increase long-term debt(undervalued, 5-year remaining life)		(170,000	)			3,382,000
Goodwill					$	710,000

Post-acquisition, Allison employs the equity method to accountfor its investment in Mathias. During the two years following thebusiness combination, Mathias reports the following income anddividends:

	Income		Dividends
2020	$	453,750	$	25,000
2021		907,500		50,000

No asset impairments have occurred since the acquisitiondate.

Individual financial statements for each company as of December31, 2021, appear below. Parentheses indicate credit balances. Dividends declared were paid in the same period.

	Allison				Mathias
IncomeStatement
Sales	$	(6,680,000	)		$	(3,970,000	)
Cost of goods sold		4,696,000				2,545,500
Depreciation expense		945,000				319,000
Amortization expense		465,000				124,000
Interest expense		83,000				74,000
Equity earnings in Mathias		(563,500	)			0
Net income	$	(1,054,500	)		$	(907,500	)
Statement of RetainedEarnings
Retained earnings 1/1	$	(5,480,000	)		$	(1,998,750	)
Net income (above)		(1,054,500	)			(907,500	)
Dividends declared		560,000				50,000
Retained earnings 12/31	$	(5,974,500	)		$	(2,856,250	)
BalanceSheet
Cash	$	96,000			$	164,000
Accounts receivable		1,020,000				260,000
Inventory		1,840,000				855,000
Investment in Mathias		6,760,250				0
Equipment (net)		3,840,000				2,101,000
Patents		130,000				0
Unpatented technology		2,195,000				1,520,000
Goodwill		474,000				0
Total assets	$	16,355,250			$	4,900,000
Accounts payable	$	(1,180,750	)		$	(343,750	)
Long-term debt	$	(1,000,000	)		$	(1,200,000	)
Common stock		(8,200,000	)			(500,000	)
Retained earnings 12/31		(5,974,500	)			(2,856,250	)
Total liabilities andequity	$	(16,355,250	)		$	(4,900,000	)

Required:

Determine Allison's December 31, 2021, Investment inMathias balance.

Prepare a worksheet to determine the consolidated valuesto be reported on Allison’s financial statements.