Required

a$.$ Show how Allison determined its December $31,2024,$ Investment in Mathias balance.

b$.$ Prepare a worksheet to determine the consolidated values to be reported on Allison's financial statements.

Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January $1,2023,$ in exchange for $$5,875,000$ 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 $$2,000,000$ including retained earnings of $$1,500,000.$

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

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

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:

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.