Manji Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January 1, 2023, 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 $1,555,000.At the acquisition date, Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary:$ 6,100,5002,055,000$ 4,045,500Consideration transferredMathias stockholders' equityExcess fair over book valueto unpatented technology (8-year remaining life)to patents (18-year remaining life)to increase long-term debt (undervalued, 5-year remaining life)GoodwillYearPostacquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following thebusiness combination, Mathias reports the following income and dividends:20232024Income$ 459,375918,750Income StatementSalesCost of goods soldDepreciation expenseAmortization expenseNo asset impairments have occurred since the acquisition date.Individual financial statements for each company as of December 31, 2024, follow. Parentheses indicate credit balances. Dividendsdeclared were paid in the same period.ItemsDividends$ 25,00050,000Interest expenseEquity earnings in MathiasNet incomeStatement of Retained EarningsRetained earnings, 1/1Net income (above)Dividends declaredRetained earnings, 12/31Balance SheetCashAccounts receivableInventoryInvestment in Mathias.Equipment (net)PatentsUnpatented technologyGoodwillTotal assetsAccounts payableLong-term debtCommon stockRetained earnings, 12/31Total liabilities and equityAllison$ (6,620,000)4,654,000930,000457,50077,000(577,750)$ (1,079,250)$ (5,450,000)(1,079,250)560,000$ (5,969,250)$ 91,5001,005,0001,810,0006,721,6253,810,000122,5002,180,000463,500$ 16,284,125$ (1,034,875)(1,000,000)(8,200,000)(5,969,250)$ (16,204, 125)Mathias$ (3,955,000)2,535,750310,000119,50071,0008$ (918,750)$ (1,989,375)(918,750)50,000$ (2,858,125)$ 159,500252,500840,00082,090,50081,505,000$ 888,0002,610,000(155,000)03,343,000$ 702,500$ 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.

Consolidation is an activity in which financial statements of a parent and its subsidiary should be…

Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January 1, 2023, 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 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