Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $6,080,000 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 $2,050,000 including retained earnings of $1,550,000. At the acquisition date, Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary: $6,080, eee 2,050,000 $4,030,000 Consideration transferred Mathias stockholders' equity Excess fair over book value to unpatented technology (8-year remaining life) to patents (10-year remaining life) to increase long-term debt (undervalued, 5-year remaining life) Goodwill $ 880,000 2,600,000 (150,000) 3,330,000 $ 700,000 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: 2020 Income $461,250 922,500 Dividends $ 25,000 50,000 2021 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 $ (6,600,000) 4,640,000 925, eee 455,000 75,000 (582,500) $ (1,087,500) $(3,950, eee) 2,532,500 307,000 118,000 70, eee $ (922,500) Income Statement Sales Cost of goods sold Depreciation expense Amortization expense Interest expense Equity earnings in Mathias Net income Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 Balance Sheet Cash Accounts receivable Inventory Investment in Mathias Equipment (net) Patents Unpatented technology Goodwill Total assets $ (5,440,000) (1,087,500 560,000 $ (5,967,5ee) $(1,986,250) (922,500) 50,000 $(2,858,750) $ $ 90,000 1,000,000 1,800,000 6,708,750 3,800,000 120,000 2,175,000 460,000 $ 16,153,750 158,000 250,000 835,000 @ 2,887,000 1,500,000 $ 4,830,000 Total assets Accounts payable Long-term debt Common stock Retained earnings 12/31 Total liabilities and equity $ 16,153,750 $ (986,250) (1,000,000) (8,200,000) (5,967,500) $(16,153,750) $ 4,830,000 $ (271,250) (1,200,000) (500, 200) (2,858,750) $(4,830,000) Required: a. Determine the annual excess fair over book value amortization. b. Prepare a worksheet to determine the consolidated values to be reported on Allison's financial statements. Complete this question by entering your answers in the tabs below. Required A Required B Determine the annual excess fair over book value amortization. Annual excess fair over book value amortization ALLISON CORPORATION AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Accounts Allison Mathias Debit Credit Consolidated Totals Income Statement Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity earnings in Mathias Net income $ (6,600,000) $ (3,950,000) 4,640,000 2,532,500 925,000 307,000 455,000 118,000 75,000 70,000 (582,500) $ (1,087,500) $ (922,500) Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 (5,440,000) (1,986,250) (1,087,500) (922,500) 560,000 50,000 $ (5,967,500) $ (2,858,750) Balance Sheet Cash Accounts receivable Inventories Investment in Mathias Equipment (net) Patents Unpatented technology Goodwill $ 90,000 $ 158,000 1,000,000 250,000 1,800,000 835,000 6,708,750 3,800,000 2,087,000 120,000 2,175,000 1,500,000 460,000 $ 16,153,750 $ 4,830,000 Total assets Accounts payable Long-term debt Common stock Retained earnings 12/31 Total liabilities and equity (986,250) (271,250) (1,000,000) (1,200,000) (8,200,000) (500,000) (5,967,500) (2,858,750) $(16,153,750) $ (4,830,000) $ 17,715,000