Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $5,957,000 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathiass stockholders equity was $2,020,000 including retained earnings of $1,520,000.

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

Consideration transferred					$	5,957,000
Mathias stockholders' equity						2,020,000
Excess fair over book value					$	3,937,000
to unpatented technology (8-year remaining life)	$	832,000
to patents (10-year remaining life)		2,540,000
to increase long-term debt (undervalued, 5-year remaining life)		(120,000	)			3,252,000
Goodwill					$	685,000

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:

	Income		Dividends
2020	$	472,500	$	25,000
2021		945,000		50,000

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	$	(6,480,000	)		$	(3,920,000	)
Cost of goods sold		4,556,000				2,513,000
Depreciation expense		895,000				289,000
Amortization expense		440,000				109,000
Interest expense		63,000				64,000
Equity earnings in Mathias		(611,000	)			0
Net income	$	(1,137,000	)		$	(945,000	)
Statement of Retained Earnings
Retained earnings 1/1	$	(5,380,000	)		$	(1,967,500	)
Net income (above)		(1,137,500	)			(945,000	)
Dividends declared		560,000				50,000
Retained earnings 12/31	$	(5,957,000	)		$	(2,862,500	)
Balance Sheet
Cash	$	81,000			$	149,000
Accounts receivable		970,000				235,000
Inventory		1,740,000				805,000
Investment in Mathias		6,631,500				0
Equipment (net)		3,740,000				2,066,000
Patents		105,000				0
Unpatented technology		2,145,000				1,470,000
Goodwill		439,000				0
Total assets	$	15,851,500			$	4,725,000
Accounts payable	$	(694,500	)		$	(162,500	)
Long-term debt		(1,000,000	)			(1,200,000	)
Common stock		(8,200,000	)			(500,000	)
Retained earnings 12/31		(5,957,000	)			(2,862,500	)
Total liabilities and equity	$	(15,851,500	)		$	(4,725,000	)

1.Prepare a worksheet to determine the consolidated values to be reported on Allisons financial statements

Prepare a worksheet to determine the consolidated values to be reported on Allisons 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.)

2. determine the annual excess fair over book value amortization

Consolidation Worksheet For Year Ending December 31, 2021 \begin{tabular}{|l|l|l|l|l|l} \hline & & & \multicolumn{2}{c|}{ Consolidation Entries } \\ \hline Accounts & Allison & Mathias & Debit & Credit & Consolidated Totals \\ \hline \end{tabular} Income Statement Revenues 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 Inventories Investment in Mathias Equipment (net) Patents Unpatented technology Goodwill Total assets Accounts payable Long-term debt Common stock Retained earnings 12/31 Total liabilities and equity