Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January $1,2023,$ in exchange for $$6,121,000$ in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December $31$ fiscal year$-$ends. At the acquisition date, Mathias$$s stockholders$$ equity was $$2,060,000$ including retained earnings of $$1,560,000.$

At the acquisition date, Allison prepared the following fair$-$value allocation schedule for its newly acquired subsidiary:

Consideration transferred $ $6,121,000$

Mathias stockholders' equity $2,060,000$

Excess fair over book value $ $4,061,000$

to unpatented technology $(8-$year remaining life$)$ $ $896,000$

to patents $(10-$year remaining life$)2,620,000$

to increase long$-$term debt $($undervalued$,5-$year remaining life$)(160,000)3,356,000$

Goodwill $ $705,000$

Postacquisition, 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:

Year Income Dividends

$2023$ $ $457,500$ $ $25,000$

$2024915,00050,000$

No asset impairments have occurred since the acquisition date.

Individual financial statements for each company as of December $31,2024,$ follow. Parentheses indicate credit balances. Dividends declared were paid in the same period.

Items Allison Mathias

Income Statement

Sales $ $(6,640,000)$ $ $(3,960,000)$

Cost of goods sold $4,668,0002,539,000$

Depreciation expense $935,000313,000$

Amortization expense $460,000121,000$

Interest expense $79,00072,000$

Equity earnings in Mathias $(573,000)0$

Net income $ $(1,071,000)$ $ $(915,000)$

Statement of Retained Earnings

Retained earnings, $1/1$ $ $(5,460,000)$ $ $(1,992,500)$

Net income $($above$)(1,071,000)(915,000)$

Dividends declared $560,00050,000$

Retained earnings, $12/31$ $ $(5,971,000)$ $ $(2,857,500)$

Balance Sheet

Cash $ $93,000$ $ $161,000$

Accounts receivable $1,010,000255,000$

Inventory $1,820,000845,000$

Investment in Mathias $6,734,5000$

Equipment $($net$)3,820,0002,094,000$

Patents $125,0000$

Unpatented technology $2,185,0001,510,000$

Goodwill $467,0000$

Total assets $ $16,254,500$ $ $4,865,000$

Accounts payable $ $(1,083,500)$ $ $(307,500)$

Long$-$term debt $(1,000,000)(1,200,000)$

Common stock $(8,200,000)(500,000)$

Retained earnings, $12/31(5,971,000)(2,857,500)$

Total liabilities and equity $ $(16,254,500)$ $ $(4,865,000)$

Required:

Determine the annual excess fair over book value amortization.

Prepare a worksheet to determine the consolidated values to be reported on Allison$$s financial statements.