Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $5,895,500 cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. Att acquisition date, Mathias's stockholders' equity was $2,005,000 including retained earnings of $1,505,000. At the acquisition date, Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary: $5,895,500 2,095,000 $3,890, 500 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 $ 808,000 2,510,000 (105,000) 3,213,000 $ 677,500 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: 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 2021 Income $ 478,125 956,250 Dividends $ 25,000 se, cee 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 Cost of goods sold Depreciation expense Amortization expense Interest expense $ (6,420,000) 4,514,000 880, eee 432, see 57,000 1600 $(3,905,000) 2,583, 250 280, eee 184,500 61,000 wuv, 432,500 57,000 (625,250) $ (1,161,750) Auvu 104,500 61,000 $ (956,250) (5,350,000) (1,161,750) 560,000 $ (5,951,750) $(1,958, 125) (956,250) 50,000 $(2,864,375) LAULAVE LA 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 Accounts payable Long-term debt Common stock Retained earnings 12/31 $ 144,500 227,500 790,000 2,855,500 $ 76,500 955,000 1,710,000 6,592,875 3,710,000 97,500 2,130,000 428,500 $ 15,700,375 $ (548, 625) (1,800, eee) (8,200, eee) (5.951.750) 1,455,000 e $ 4,672,500 $ (188, 125) (1,200,000) (500,000) (2.864.375) Return to quest ALLU payauze Long-term debt Common stock Retained earnings 12/31 Total liabilities and equity 140,04) (1,000,000) (8,200,000) (5,951,750) $(15,700,375) 1400, A2D) (1,200,000) (500,000) (2,864,375) $(4,672,500) Required: a. Determine the fair value in excess of book value for Allison's acquisition date investment in Mathias b. Prepare a worksheet to determine the consolidated values to be reported on Allison's financial statements. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prev 4 of 7 Next > Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Determine the fair value in excess of book value for Allison's acquisition date investment in Mathias. investimien Fair value in excess of book value $ 6,592,875 % Required B > Consolidation Entries Accounts Allison Mathias Debit Credit Consolidated Totals Income Statement Revenues $ 10,325,000 7,017,250 1,160,000 $ (3,905,000) 2,503,250 280,000 104,500 61,000 $(6,420,000) 4,514,000 880,000 432,500 57,000 (625,250) $ (1.161.750) Cost of goods sold Depreciation expense Amortization expense Interest expense Equity earnings in Mathias Net income 352,000 889,000 97,000 21,000 625,250 0 1,161,750 $ (956,250) $ Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared (5.350,000) (1.161.750) 560,000 1,161,750 (1.958,125) (956,250) 50,000 S $ 5.951.750 Retained earnings 12/31 $15.951.750) Return to Consolidation Entries Accounts Allison Mathias Debit Credit Consolidated Totals Income Statement Revenues $ 10,325,000 $(6,420,000) 4,514,000 880,000 432,500 57,000 (625,250) S (1.161.750) Cost of goods sold Depreciation expense Amortization expense Interest expense Equity earnings in Mathias Net income $ (3,905,000) 2,503,250 280,000 104,500 61,000 352,000 7,017.250 1.160,000 889,000 97,000 07 1.161.750 OOOOO 21,000 625,250 $ (956,250) $ Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared (5,350,000) (1,161,750) 560.000 1.161.750 (1.958, 125) (956,250) 50,000 s $ 5.951.750 Retained earnings 12/31 $15.951.750) Balance Sheet $ Cash Accounts receivable 144,500 227,500 790,000 Inventories 50,000 6,642,875 Investment in Mathias Equipment (net) Patents $ 76,500 955,000 1,710,000 6,592,875 3,710,000 97,500 2,130,000 428,500 $ 15,700,375 2,055,500 $ 221,000 1,182,500 2,500,000 0 5,765,500 2,105,500 4,191,000 1,106,000 $ 17,071,500 251,000 101,000 1,455,000 2,259,000 707,000 677,500 Unpatented technology Goodwill Total assets $ 4,672,500 21.000 84,000 Accounts payable Long-term debt Common stock Retained earnings 12/31 $ 500,000 (108,125) (1,200,000) (500,000) (2.864,375) is (4.672.500) (548,625) (1,000,000) (8,200,000) (5.951,750) $ (15,700,375) 656,750 2,263,000 8,200,000 5,951,750 17.071,500 $ $ 5.191,750 $ 7,099.875 $ Total liabilities and equity