Problem 3-25 (Algo) (LO 3-1, 3-3a, 3-4) Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $6,100,500 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 $2,055,000 including retained earnings of $1,555,000. At the acquisition date, Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary: $6,100,500 2,055,000 $4,045,500 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 888,000 2,610,000 (155,000) 3,343,000 $ 702,500 athias. During the two years following the Postacquisition, Allison employs the equity method to account for its investment in business combination, Mathias reports the following income and dividends: 2020 2021 Income $ 459,375 918,750 Dividends $ 25,000 50,000 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 $ (6,620,000) 4,654,000 930,000 457,500 77,000 (577,750) $ (1,079,250) $(3,955, 000) 2,535,750 310,000 119,500 71,000 0 $ (918,750) $ (5,450,000) (1,079,250) 560,000 $ (5,969,250) $(1,989,375) (918,750) 50,000 $(2,858,125) 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 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 Total liabilities and equity $ 159,500 252,500 840,000 $ 91,500 1,005,000 1,810,000 6,721,625 3,810,000 122,500 2,180,000 463,500 $ 16, 204, 125 $ (1,034,875) (1,000,000) (8,200,000) (5,969,250) $(16,204,125) 2,090,500 0 1,505,000 0 $ 4,847,500 $ (289,375) (1,200,000) (500,000) (2,858,125) $(4,847,500) Required: a. Determine the annual excess fair over book value amortization. b. Prepare a worksheet to determine the consolidated values to be reported on Allison's financial statements. Complete this question by entering your answers in the tabs below. Required A Required B Determine the annual excess fair over book value amortization. Annual excess fair over book value amortization Required A Required B Prepare a worksheet to determine the consolidated values to be reported on Allison's financial statements. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.) Show less ALLISON CORPORATION AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Accounts Allison Mathias Debit Credit Consolidated Totals Income Statement Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity earnings in Mathias Net income $ (6,620,000) $ (3,955,000) 4,654,000 2,535,750 930,000 310,000 457 500 119.500 77,000 71,000 (577,750) $ (1,079,250) $ (918,750) Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 (5,450,000) (1,989,375) (1,079,250) (918,750) 560,000 50.000 $ (5,969,250) $ (2,858,125) Balance Sheet Cash Accounts receivable Inventories Investment in Mathias Equipment (net) Patents Unpatented technology Goodwill Total assets $ 91,500 $ 159,500 1,005,000 252,500 1,810.000 840.000 6,721,625 3,810,000 2.090.500 122.500 2.180,000 1.505.000 463 500 $ 16,204,125 $ 4,847,500 Accounts payable Long-term debt Common stock Retained earnings 12/31 Total liabilities and equity (1,034,875) (289,375) (1,000,000) (1,200,000) (8,200,000) (500,000) (5,969,250) (2.858,125) S (16,204, 125) $ (4,847,500) $ 17,786,500