Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January $1,2023,$ in exchange for $$6,162,000$ in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December $31$ fiscal year$-$ends. At the acquisition date, Mathias$$s stockholders$$ equity was $$2,070,000$ including retained earnings of $$1,570,000.$

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

Consideration transferred $ $6,162,000$

Mathias stockholders' equity $2,070,000$

Excess fair over book value $ $4,092,000$

to unpatented technology $(8-$year remaining life$)$ $ $912,000$

to patents $(10-$year remaining life$)2,640,000$

to increase long$-$term debt $($undervalued$,5-$year remaining life$)(170,000)3,382,000$

Goodwill $ $710,000$

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

$2023$ $ $453,750$ $ $25,000$

$2024907,50050,000$

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 $ $(6,680,000)$ $ $(3,970,000)$

Cost of goods sold $4,696,0002,545,500$

Depreciation expense $945,000319,000$

Amortization expense $465,000124,000$

Interest expense $83,00074,000$

Equity earnings in Mathias $(563,500)0$

Net income $ $(1,054,500)$ $ $(907,500)$

Statement of Retained Earnings

Retained earnings, $1/1$ $ $(5,480,000)$ $ $(1,998,750)$

Net income $($above$)(1,054,500)(907,500)$

Dividends declared $560,00050,000$

Retained earnings, $12/31$ $ $(5,974,500)$ $ $(2,856,250)$

Balance Sheet

Cash $ $96,000$ $ $164,000$

Accounts receivable $1,020,000260,000$

Inventory $1,840,000855,000$

Investment in Mathias $6,760,2500$

Equipment $($net$)3,840,0002,101,000$

Patents $130,0000$

Unpatented technology $2,195,0001,520,000$

Goodwill $474,0000$

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 and equity $ $(16,355,250)$ $ $(4,900,000)$

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.