Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January $1,2020,$ in exchange for $$6,059,500$ in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December $31$ fiscal year$-$ends. At the acquisition date, Mathias$$s stockholders$$ equity was $$2,045,000$ including retained earnings of $$1,545,000.$

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

Consideration transferred $ $6,059,500$

Mathias stockholders' equity $2,045,000$

Excess fair over book value $ $4,014,500$

to unpatented technology $(8-$year remaining life$)$ $ $872,000$

to patents $(10-$year remaining life$)2,590,000$

to increase long$-$term debt $($undervalued$,5-$year remaining life$)(145,000)3,317,000$

Goodwill $ $697,500$

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:

Income Dividends

$2020$ $ $463,125$ $ $25,000$

$2021926,25050,000$

No asset impairments have occurred since the acquisition date.

Individual financial statements for each company as of December $31,2021,$ follow. Parentheses indicate credit balances. Dividends declared were paid in the same period.

Allison Mathias

Income Statement

Sales $ $(6,580,000)$ $ $(3,945,000)$

Cost of goods sold $4,626,0002,529,250$

Depreciation expense $920,000304,000$

Amortization expense $452,500116,500$

Interest expense $73,00069,000$

Equity earnings in Mathias $(587,250)0$

Net income $ $(1,095,750)$ $ $(926,250)$

Statement of Retained Earnings

Retained earnings $1/1$ $ $(5,430,000)$ $ $(1,983,125)$

Net income $($above$)(1,095,750)(926,250)$

Dividends declared $560,00050,000$

Retained earnings $12/31$ $ $(5,965,750)$ $ $(2,859,375)$

Balance Sheet

Cash $ $88,500$ $ $156,500$

Accounts receivable $995,000247,500$

Inventory $1,790,000830,000$

Investment in Mathias $6,695,8750$

Equipment $($net$)3,790,0002,083,500$

Patents $117,5000$

Unpatented technology $2,170,0001,495,000$

Goodwill $456,5000$

Total assets $ $16,103,375$ $ $4,812,500$

Accounts payable $ $(937,625)$ $ $(253,125)$

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

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

Retained earnings $12/31(5,965,750)(2,859,375)$

Total liabilities and equity $ $(16,103,375)$ $ $(4,812,500)$

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.