Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January $1,2023,$ in exchange for $$5,916,000$ in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December $31$ fiscal year$-$ends. At the acquisition date, Mathias$$s stockholders$$ equity was $$2,010,000$ including retained earnings of $$1,510,000.$

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

Consideration transferred $ $5,916,000$

Mathias stockholders' equity $2,010,000$

Excess fair over book value $ $3,906,000$

to unpatented technology $(8-$year remaining life$)$ $ $816,000$

to patents $(10-$year remaining life$)2,520,000$

to increase long$-$term debt $($undervalued$,5-$year remaining life$)(110,000)3,226,000$

Goodwill $ $680,000$

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

$2023$ $ $476,250$ $ $25,000$

$2024952,50050,000$

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 $ $(6,440,000)$ $ $(3,910,000)$

Cost of goods sold $4,528,0002,506,500$

Depreciation expense $885,000283,000$

Amortization expense $435,000106,000$

Interest expense $59,00062,000$

Equity earnings in Mathias $(620,500)0$

Net income $ $(1,153,500)$ $ $(952,500)$

Statement of Retained Earnings

Retained earnings, $1/1$ $ $(5,360,000)$ $ $(1,961,250)$

Net income $($above$)(1,153,500)(952,500)$

Dividends declared $560,00050,000$

Retained earnings, $12/31$ $ $(5,953,500)$ $ $(2,863,750)$

Balance Sheet

Cash $ $78,000$ $ $146,000$

Accounts receivable $960,000230,000$

Inventory $1,720,000795,000$

Investment in Mathias $6,605,7500$

Equipment $($net$)3,720,0002,059,000$

Patents $100,0000$

Unpatented technology $2,135,0001,460,000$

Goodwill $432,0000$

Total assets $ $15,750,750$ $ $4,690,000$

Accounts payable $ $(597,250)$ $ $(126,250)$

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

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

Retained earnings, $12/31(5,953,500)(2,863,750)$

Total liabilities and equity $ $(15,750,750)$ $ $(4,690,000)$

Required:

Determine the annual excess fair over book value amortization.