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 $ 344,000 Complete this question by entering your answers in the tabs below. 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.) Accounts Income Statement Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity earnings in Mathias Net income statement of Retained Earninge Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 Balance Sheet Cash Accounts receivable Inventories Investment in Mathias Equipment (net) Patents Unpatented technology Goodwill Total assets ALLISON CORPORATION AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2021 Accounts payable Long-term debt Common stock Retained earnings 12/31 Total liabilities and equity Allison Mathias $ (6,680,000) $ (3,970,000) 4,696,000 2,545,500 945,000 319,000 465,000 124,000 83,000 74,000 (563,500) $ (1,054,500) S (907,500) (5,480,000) (1,998,750) (1,054,500) (907,500) 560,000 50,000 $ (5,974,500) S (2,856,250) $ 96,000 S 1,020,000 1,840,000 6,760,250 3,840,000 130,000 2,195,000 164,000 260,000 855,000 2,101,000 1,520,000 474,000 $ 16,355,250 S 4,900,000 (1,180,750) (343,750) (1,000,000) (1,200,000) (8,200,000) (500,000) (5,974,500) (2,856,250) $(16,355,250) S (4,900,000) $ Consolidation Entries Credit Debit Consolidated Totale $(10,650,000) 7,241,500 1,264,000 0 $ 18,001,000 Show less A

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 $ 344,000 Complete this question by entering your answers in the tabs below. 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.) Accounts Income Statement Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity earnings in Mathias Net income statement of Retained Earninge Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 Balance Sheet Cash Accounts receivable Inventories Investment in Mathias Equipment (net) Patents Unpatented technology Goodwill Total assets ALLISON CORPORATION AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2021 Accounts payable Long-term debt Common stock Retained earnings 12/31 Total liabilities and equity Allison Mathias $ (6,680,000) $ (3,970,000) 4,696,000 2,545,500 945,000 319,000 465,000 124,000 83,000 74,000 (563,500) $ (1,054,500) S (907,500) (5,480,000) (1,998,750) (1,054,500) (907,500) 560,000 50,000 $ (5,974,500) S (2,856,250) $ 96,000 S 1,020,000 1,840,000 6,760,250 3,840,000 130,000 2,195,000 164,000 260,000 855,000 2,101,000 1,520,000 474,000 $ 16,355,250 S 4,900,000 (1,180,750) (343,750) (1,000,000) (1,200,000) (8,200,000) (500,000) (5,974,500) (2,856,250) $(16,355,250) S (4,900,000) $ Consolidation Entries Credit Debit Consolidated Totale $(10,650,000) 7,241,500 1,264,000 0 $ 18,001,000 Show less A

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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 $ 6,162,000 Mathias stockholders' equity 2,070,000 Excess fair over book value $ 4,092,000 to unpatented technology (8-year remaining life) $ 912,000 to patents (10-year remaining life) 2,640,000 to increase long-term debt (undervalued, 5-year remaining life) (170,000 ) 3,382,000 Goodwill $ 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 Dividends 2020 $ 453,750 $ 25,000 2021 907,500 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 Income Statement Sales $ (6,680,000 ) $ (3,970,000 ) Cost of goods sold 4,696,000 2,545,500 Depreciation expense 945,000 319,000 Amortization expense 465,000 124,000 Interest expense 83,000 74,000 Equity earnings in Mathias (563,500 ) 0 Net income $ (1,054,500 ) $ (907,500 ) Statement of Retained Earnings Retained earnings 1/1 $ (5,480,000 ) $ (1,998,750 ) Net income (above) (1,054,500 ) (907,500 ) Dividends declared 560,000 50,000 Retained earnings 12/31 $ (5,974,500 ) $ (2,856,250 ) Balance Sheet Cash $ 96,000 $ 164,000 Accounts receivable 1,020,000 260,000 Inventory 1,840,000 855,000 Investment in Mathias 6,760,250 0 Equipment (net) 3,840,000 2,101,000 Patents 130,000 0 Unpatented technology 2,195,000 1,520,000 Goodwill 474,000 0 Total assets $ 16,355,250 $ 4,900,000 Accounts payable $ (1,180,750 ) $ (343,750 ) Long-term debt (1,000,000 ) (1,200,000 ) Common stock (8,200,000 ) (500,000 ) Retained earnings 12/31 (5,974,500 ) (2,856,250 ) Total liabilities and equity $ (16,355,250 ) $ (4,900,000 ) Required: Determine the annual excess fair over book value amortization. Prepare a worksheet to determine the consolidated values to be reported on Allison’s financial statements.

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 $ 344,000

Complete this question by entering your answers in the tabs below.
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.)
Accounts
Income Statement
Revenues
Cost of goods sold
Depreciation expense
Amortization expense
Interest expense
Equity earnings in Mathias
Net income
statement of Retained Earninge
Retained earnings 1/1
Net income (above)
Dividends declared
Retained earnings 12/31
Balance Sheet
Cash
Accounts receivable
Inventories
Investment in Mathias
Equipment (net)
Patents
Unpatented technology
Goodwill
Total assets
ALLISON CORPORATION AND CONSOLIDATED SUBSIDIARY
Consolidation Worksheet
For Year Ending December 31, 2021
Accounts payable
Long-term debt
Common stock
Retained earnings 12/31
Total liabilities and equity
Allison
Mathias
$ (6,680,000) $ (3,970,000)
4,696,000
2,545,500
945,000
319,000
465,000
124,000
83,000
74,000
(563,500)
$ (1,054,500) S (907,500)
(5,480,000)
(1,998,750)
(1,054,500)
(907,500)
560,000
50,000
$ (5,974,500) S (2,856,250)
$ 96,000 S
1,020,000
1,840,000
6,760,250
3,840,000
130,000
2,195,000
164,000
260,000
855,000
2,101,000
1,520,000
474,000
$ 16,355,250 S 4,900,000
(1,180,750)
(343,750)
(1,000,000) (1,200,000)
(8,200,000)
(500,000)
(5,974,500) (2,856,250)
$(16,355,250) S (4,900,000) $
Consolidation Entries
Credit
Debit
Consolidated
Totale
$(10,650,000)
7,241,500
1,264,000
0 $ 18,001,000
Show less A

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