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Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January $1,2020,$ in exchange for $$6,387,500$ in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December $31$ fiscal year$-$ends. At the acquisition date, Mathias$$s stockholders$$ equity was $$2,125,000$ including retained earnings of $$1,625,000.$

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

Consideration transferred $ $6,387,500$

Mathias stockholders' equity $2,125,000$

Excess fair over book value $ $4,262,500$

to unpatented technology $(8-$year remaining life$)$ $ $1,000,000$

to patents $(10-$year remaining life$)2,750,000$

to increase long$-$term debt $($undervalued$,5-$year remaining life$)(225,000)3,525,000$

Goodwill $ $737,500$

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

$2020$ $ $433,125$ $ $25,000$

$2021866,25050,000$

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.

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