Problem 25

25. Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2017, in exchange for S5,875,000 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 S2,000,000 including retained eamings of $1.500.000. At the acquisition date, Allison prepared the following fair value allocation schedule for its newly acquired subsidiary Consideration transferred $5.875.000 Mathias stockholders' equity 2,000,000 Excess fair over book value $3,875,000 to unpatented technology (8-year remaining life) $800,000 to patents (10-year remaining life) 2,500,000 to increase long-term debt (undervalued, 5-year (100,000) 3.200.000 remaining life) Goodwill 675,000