Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January $1,2023,$ in exchange for $$6,326,000$ in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December $31$ fiscal year$-$ends. At the acquisition date, Mathias$$s stockholders$$ equity was $$2,110,000$ including retained earnings of $$1,610,000.$

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

Consideration transferred $ $6,326,000$

Mathias stockholders' equity $2,110,000$

Excess fair over book value $ $4,216,000$

to unpatented technology $(8-$year remaining life$)$ $ $976,000$

to patents $(10-$year remaining life$)2,720,000$

to increase long$-$term debt $($undervalued$,5-$year remaining life$)(210,000)3,486,000$

Goodwill $ $730,000$

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

$2023$ $ $438,750$ $ $25,000$

$2024877,50050,000$

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 $ $(6,840,000)$ $ $(4,010,000)$

Cost of goods sold $4,808,0002,571,500$

Depreciation expense $985,000343,000$

Amortization expense $485,000136,000$

Interest expense $99,00082,000$

Equity earnings in Mathias $(525,500)0$

Net income $ $(988,500)$ $ $(877,500)$

Statement of Retained Earnings

Retained earnings, $1/1$ $ $(5,560,000)$ $ $(2,023,750)$

Net income $($above$)(988,500)(877,500)$

Dividends declared $560,00050,000$

Retained earnings, $12/31$ $ $(5,988,500)$ $ $(2,851,250)$

Balance Sheet

Cash $ $108,000$ $ $176,000$

Accounts receivable $1,060,000280,000$

Inventory $1,920,000895,000$

Investment in Mathias $6,863,2500$

Equipment $($net$)3,920,0002,129,000$

Patents $150,0000$

Unpatented technology $2,235,0001,560,000$

Goodwill $502,0000$

Total assets $ $16,758,250$ $ $5,040,000$

Accounts payable $ $(1,569,750)$ $ $(488,750)$

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

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

Retained earnings, $12/31(5,988,500)(2,851,250)$

Total liabilities and equity $ $(16,758,250)$ $ $(5,040,000)$

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.