Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020,...

  
 
 

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Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $6,264,500 in cash. Allison intends to maintain Mathlas as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathias's stockholders' equity was $2,095,000 Including retained earnings of $1,595,000. 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 $6, 264, 500 2,095, e00 $4,169, 500 $ 952,000 2,690, 000 (195, ee9) 3,447,000 $ 722,500 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: Income Dividends $ 25,000 50, e0e 2020 2021 $ 444,375 888,750 No asset impairments have occurred since the acquisition date. Allison Mathias Income Statement $ (6,780,000) 4,766,000 970, e00 477, 500 93, еее (539,750) $ (1,013,250) $(3,995,e00) 2,561,750 334,000 Sales Cost of goods sold Depreciation expense Amortization expense Interest expense 131,500 79,e00 Equity earnings in Mathias Net income $ (888,750) Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 $ (5,530, eee) (1,013,250) 560, 000 $ (5,983,250) $(2,014, 375) (888,750) 50, eee $(2,853,125) Balance Sheet Cash 24 103,500 Accounts receivable Inventory Investment in Mathias 1,045, 000 1,890,e00 171,500 272, 500 880, 000 6,824,625 3,890, e00 142,500 2,220, 000 491,500 Equipment (net) Patents 2,118,500 Unpatented technology Goodwill 1,545, e00 Total assets $ 16,607,125 $ (1,423,875) (1, 000, еее) (8,200, e00) (5,983,250) $(16,607, 125) $ 4,987,500 $(434,375) (1,200, 000) (500, 000) (2,853,125) $(4,987,500) Accounts payable Long-term debt Common stock Retained earnings 12/31 Total liabilities and equity Required: a. Determine the fair value in excess of book value for Allison's acquisition date investment in Mathias. 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 fair value in excess of book value for Allison's acquisition date investment in Mathias. Fair walue in exOess of book vialue Required A Required B > 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 A Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Consolidated Totals Accounts Allison Mathias Debit Credit Income Statement Revenues $ (6,780,000) $ (3,995,000) Cost of goods sold 4,766,000 2,561,750 Depreciation expense Amortization expense 970,000 334,000 477,500 131,500 Interest expense 93,000 79,000 Equity earnings in Mathlas (539,750) Net income $ (1,013,250)$ (888,750) Statement of Retained Earnings Retained eamings 1/1 Net income (above) (5,530,000) (1,013,250) 560,000 $ (5,983,250) $ (2,853,125) (2,014,375) (888,750) Dividends declared 50,000 Retainod earnings 12/31 Balance Sheet Cash 24 103,500 $ 1,045,000 171,500 Accounts receivable 272,500 Inventories 1,890,000 880,000 Investmont in Mathias 6,824,625 Equipment (net) Patonts 2,118,500 3,890,000 142,500 Unpatented technology 2,220,000 1,545,000 Goodwill 491,500 Total assets $ 16,607,125 $ 4,987,500 Accounts payable (1,423,875) (434,375) Long-term debt Common stock (1,000,000) (8,200,000) (1,200,000) (500,000) Retained earnings 12/31 (5,983,250) (2,853,125) Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2020, in exchange for $6,264,500 in cash. Allison intends to maintain Mathlas as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathias's stockholders' equity was $2,095,000 Including retained earnings of $1,595,000. 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 $6, 264, 500 2,095, e00 $4,169, 500 $ 952,000 2,690, 000 (195, ee9) 3,447,000 $ 722,500 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: Income Dividends $ 25,000 50, e0e 2020 2021 $ 444,375 888,750 No asset impairments have occurred since the acquisition date. Allison Mathias Income Statement $ (6,780,000) 4,766,000 970, e00 477, 500 93, еее (539,750) $ (1,013,250) $(3,995,e00) 2,561,750 334,000 Sales Cost of goods sold Depreciation expense Amortization expense Interest expense 131,500 79,e00 Equity earnings in Mathias Net income $ (888,750) Statement of Retained Earnings Retained earnings 1/1 Net income (above) Dividends declared Retained earnings 12/31 $ (5,530, eee) (1,013,250) 560, 000 $ (5,983,250) $(2,014, 375) (888,750) 50, eee $(2,853,125) Balance Sheet Cash 24 103,500 Accounts receivable Inventory Investment in Mathias 1,045, 000 1,890,e00 171,500 272, 500 880, 000 6,824,625 3,890, e00 142,500 2,220, 000 491,500 Equipment (net) Patents 2,118,500 Unpatented technology Goodwill 1,545, e00 Total assets $ 16,607,125 $ (1,423,875) (1, 000, еее) (8,200, e00) (5,983,250) $(16,607, 125) $ 4,987,500 $(434,375) (1,200, 000) (500, 000) (2,853,125) $(4,987,500) Accounts payable Long-term debt Common stock Retained earnings 12/31 Total liabilities and equity Required: a. Determine the fair value in excess of book value for Allison's acquisition date investment in Mathias. 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 fair value in excess of book value for Allison's acquisition date investment in Mathias. Fair walue in exOess of book vialue Required A Required B > 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 A Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Consolidated Totals Accounts Allison Mathias Debit Credit Income Statement Revenues $ (6,780,000) $ (3,995,000) Cost of goods sold 4,766,000 2,561,750 Depreciation expense Amortization expense 970,000 334,000 477,500 131,500 Interest expense 93,000 79,000 Equity earnings in Mathlas (539,750) Net income $ (1,013,250)$ (888,750) Statement of Retained Earnings Retained eamings 1/1 Net income (above) (5,530,000) (1,013,250) 560,000 $ (5,983,250) $ (2,853,125) (2,014,375) (888,750) Dividends declared 50,000 Retainod earnings 12/31 Balance Sheet Cash 24 103,500 $ 1,045,000 171,500 Accounts receivable 272,500 Inventories 1,890,000 880,000 Investmont in Mathias 6,824,625 Equipment (net) Patonts 2,118,500 3,890,000 142,500 Unpatented technology 2,220,000 1,545,000 Goodwill 491,500 Total assets $ 16,607,125 $ 4,987,500 Accounts payable (1,423,875) (434,375) Long-term debt Common stock (1,000,000) (8,200,000) (1,200,000) (500,000) Retained earnings 12/31 (5,983,250) (2,853,125)