Return to questio 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 $6,162,000 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 $2,070,000 including retained earnings of $1,570,000. 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 1.fe) to inerense long-term debt undervalued, 5-year remaining life) Goodwill 56.162,000 2,070,000 54,092.000 $ 912.000 2,640.000 (170,000) 3,382,000 5 710,000 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: Income Dividende 2020 $ 453,750 $ 25,000 2021 907,500 50,000 No asset impairments have occurred since the acquisition date + Return to 2020 2021 Income $ 453,750 907.500 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 $ (6,680,000) 4.696,000 945,000 465.000 83,000 (563,500) 5 (1,054,500) $13.970,000) 2,545,500 319,000 124,000 74.000 $ 1907,500) Income Statement Sales Cost of goods sold Depreciation expense Amortization expense Interest expense Equity earnings in Mathias Net Income Statement of Retained Warnings Retained earnings 1/1 Net income (above) Dividends declared Retained sarninge 12/31 Balance Sheet Cash Accounts receivable Inventory Investment in Mathias Equipment (net) Patents Unpatented technology Goodwill 5 (5,480,000) (1,054,500) 560,000 5 (5.974,500) $(1.998,750) (907,500) 50,000 $12,856,250) $ 96.000 1,020,000 1,940,000 6,760,250 3.340,000 130.000 2,195,000 474.000 $ 164,000 260,000 855.000 0 2.101.000 0 1,520,000 Return to UUUUWAAR Total assets Accounts payable Long-term debt Common stock Retained earnings 12/31 Total liabilities and equity $ 16,355,250 $ (1,180,750) (1,000,000) (8,200,000) (5,974.500) $116,355,250) $ 4,900,000 6 (343,750) (1,200,000) (500,000) (2,856,250) $44,900,000) 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 Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Ilidated values to be reported on Allison's financial statements. (For accounts where amount and enter this amount in the debit column Accounts Allison Mathias Dobit Credit Income Statement Consolidated Totals Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity earnings in Mathias Net income $(6,680,000) 4,696,000 945,000 465,000 83,000 (563,500) $(1,054,500) (3,970,000) 2,545,500 319,000 124,000 74,000 $ 10,650,000 7,241,500 1,264,000 589,000 157.000 563,500 % $ 1,962,000 3 $ (907,500) Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 (5,480,000) (1,054,500) 560,000 $(5.974,500) (1.998,750) (907,500) 50,000 $ (2,856,250) 7,478,750 1,962,000 (610,000) 8,830,750 S $ $ s Balance Sheet Cash Accounts receivable Inventories Inactment in this 96.000 1,020,000 1.840,000 676 26 164,000 260,000 855,000 260,000 1,280,000 2,695,000 TAN 4 of 5 BR eck my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not i Cammy Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 (5,480,000) (1,054,500) 560,000 $(5,974,500) (1.998,750) (907,500) 50,000 $ (2.856,250) 7.478,750 1,962,000 (610,000) 8,830,750 $ + $ 164,000 260,000 855,000 6,760,250 Balance Sheet Cash Accounts receivable Inventories Investment in Mathias Equipment (net) Patents Unpatented technology Goodwill Total assets $ 96,000 1,020,000 1,840,000 6,760,250 3,840,000 130,000 2,195,000 474,000 $ 16,355,250 $ 260,000 1,280,000 2,695,000 0 5.941,000 22,420,000 $ 4,399,000 1,184,000 $ 18,001,000 OOOO 2,101,000 1,520,000 2,112,000 684,000 710,000 $ 4,900,000 102,000 Accounts payable Long-term debt Common stock Retained earnings 12/31 $ 1,524,500 2,302,000 8,200,000 8,830,750 (1.180.750) (1,000,000) (8,200,000) (5,974,500) $ (16,355.250) 500,000 (343,750) (1,200,000) (500,000) (2,856,250) $ (4.900.000) $ $ 6,862,250 $ 18,001,000 $ 4,006,000 Total liabilities and equity