Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2017, in exchange for $6,367,000 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathias's stockholders' equity was $2,120,000 including retained earnings of $1,620,000. At the acquisition date, Allison prepared the following fair value allocation schedule for its newly acquired subsidiary: Consideration transferred $6,367,000 Mathias stockholders' equity 2,120,000 Excess fair over book value $4,247,000 to unpatented technology (8-year remaining life) to patents (10-year remaining life) to increase long-term debt (undervalued, 5-year remaining 1ife) 992,000 2,740,000 (220,000) 3,512,000 S 735,000 Goodwill Post-acquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the business combination, Mathias reports the following income and dividends: Income Dividends $ 435,000 2017 $25,000 50,000 2018 870,000 No asset impairments have occurred since the acquisition date. Individual financial statements for each company as of December 31, 2018, appear below. Parentheses indicate credit balances. Dividends declared were paid in the same period Allison Mathias Income Statement Sales $(6,880,000) 4,836,000 995,000 $(4,020,000) 2,578,000 349,000 139,000 84,000 Cost of goods sold Depreciation expense Amortization expense 490,000 103,000 Interest expense (516,000) 0 Equity earnings in Mathias (972,000) (870,000) Net income Statement of Retained Earnings S (5,580,000) (972,000) 560,000 Retained earnings 1/1 Net income (above) $(2,030,000) (870,000) 50,000 Dividends declared $(2,850,000) $(5,992,000) Retained earnings 12/31 Balance Sheet 179,000 285,000 Cash S 111,000 1,070,000 Accounts receivable Inventory Investment in Mathias 1,940,000 6,889,000 3,940,000 155,000 2,245,000 509,000 905,000 0 2,136,000 0 Equipment (net) Patents 1,570,000 Unpatented technology 0 Goodwill 16,859,000 5,075,000 Total assets $ (1,667,000) (1,000,000) (8,200,000) (5,992,000) Accounts payable Long-term debt (525,000) $(1,200,000) (500,000) (2,850,000) Common stock Retained earnings 12/31 liabi and equity $(16,859,000) $(5,075,000) ie Tot Kequirea A Kequirea Prepare a worksheet to determine the consolidated values to be reported on Allison's financial statements. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Consolidated Totals column should be entered with a minus sign.) Show less A ALLISON CORPORATION AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Consolidated Accounts Credit Allison Mathias Debit Totals Income Statement (6,880,000) S (4,020,000) (10,900,000) 7,414,000 1,344,000 Revenues Cost of goods sold Depreciation expense 4,836,000 2,578,000 995,000 349,000 Amortization expense 490,000 139,000 Interest expense Equity earnings in Mathias 103,000 84,000 (516,000) (972,000) $ (870,000) (2,142,000) Net income Statement of Retained Earnings 2,030,000 Retained earnings 1/1 Net income (above) Dividends declared (5,580,000) (2,030,000) (5,580,000) (972,000) (870,000) (2,142,000) 560,000 (7,162,000) 560,000 50,000 50,000 $(5,992,000) $(2,850,000) Retained earnings 12/31 Balance Sheet 290,000 1,355,000 2,845,000 Cash $ 111,000 179,000 S 1,070,000 Accounts receivable 285,000 Inventories 1,940,000 905,000 Investment in Mathias 6,889,000 0 Equipment (net) 6,076,000 2,136,000 3,940,000 155,000 Patents Unpatented technology 2,245,000 1,570,000 Goodwill 509,000 $ 10,566,000 16,859,000 5,075,000 Total assets Accounts payable Long-term debt (1,667,000) (525,000) (1,000,000) (1,200,000) Common stock (8,200,000) (500,000) Retained earnings 12/31 (5,992,000) (2,850,000) (7,162,000) $ (7,162,000) $(16,859,000) S(5,075,000) $ Total liabilities and equity S 2,030,000 50,000