ONLY NEED B WILL UP VOTE

Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January $1,2023,$ in exchange for $$6,039,000$ in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December $31$ fiscal year$-$ends. At the acquisition date, Mathias$$s stockholders$$ equity was $$2,040,000$ including retained earnings of $$1,540,000.$

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

Consideration transferred $ $6,039,000$

Mathias stockholders' equity $2,040,000$

Excess fair over book value $ $3,999,000$

to unpatented technology $(8-$year remaining life$)$ $ $864,000$

to patents $(10-$year remaining life$)2,580,000$

to increase long$-$term debt $($undervalued$,5-$year remaining life$)(140,000)3,304,000$

Goodwill $ $695,000$

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

$2023$ $ $465,000$ $ $25,000$

$2024930,00050,000$

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 $ $(6,560,000)$ $ $(3,940,000)$

Cost of goods sold $4,612,0002,526,000$

Depreciation expense $915,000301,000$

Amortization expense $450,000115,000$

Interest expense $71,00068,000$

Equity earnings in Mathias $(592,000)0$

Net income $ $(1,104,000)$ $ $(930,000)$

Statement of Retained Earnings

Retained earnings, $1/1$ $ $(5,420,000)$ $ $(1,980,000)$

Net income $($above$)(1,104,000)(930,000)$

Dividends declared $560,00050,000$

Retained earnings, $12/31$ $ $(5,964,000)$ $ $(2,860,000)$

Balance Sheet

Cash $ $87,000$ $ $155,000$

Accounts receivable $990,000245,000$

Inventory $1,780,000825,000$

Investment in Mathias $6,683,0000$

Equipment $($net$)3,780,0002,080,000$

Patents $115,0000$

Unpatented technology $2,165,0001,490,000$

Goodwill $453,0000$

Total assets $ $16,053,000$ $ $4,795,000$

Accounts payable $ $(889,000)$ $ $(235,000)$

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

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

Retained earnings, $12/31(5,964,000)(2,860,000)$

Total liabilities and equity $ $(16,053,000)$ $ $(4,795,000)$

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.ALLISON CORPORATION AND CONSOLIDATED SUBSIDIARY

Consolidation Worksheet

For Year Ending December $31,2024$

Income Statement

Sales

Cost of goods sold

Depreciation expense

Amortization expense

Interest expense

Equity earnings in Mathias

Net income

Statement of Retained Earnings

Retained earnings $\frac{1}{1}$

Net income $($above$)$

Dividends declared

Retained earnings $\frac{12}{31}$

Balance Sheet

Cash

Accounts receivable

Inventories

Accounts

Allison

Mathias

Credit

Consolidated

Totals