5 Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $685,000 in cash. O'Brien reported net assets with a carrying amount of $371,000 at that time. Some of O'Brien's assets either were unrecorded (having been Internally developed) or had fair values that differed from book values as follows: 10 points $ Trademarks (indefinite life) Customer relationships (5-year remaining life) Equipment (10-year remaining life) Book Values 80,000 0 399,000 Fair Values $ 247, 000 100.800 364,800 eBook Print Any goodwill is considered to have an indefinite life with no Impairment charges during the year. The following are financial statements at the end of the first year for these two companies prepared from their separately maintained accounting systems. O'Brlen declared and paid dividends in the same period. Credit balances are indicated by parentheses. References $ $ S Patrick $ (1,627, 500) 434,000 87,000 29, 600 (245, 460) $ (1,322, 360) $ (804, 000) (1,322, 360) 151,000 S (1,975, 360) 223,000 328,000 209,000 841, 460 550,000 0 950,000 0 $ 3, 101, 460 (726, 100) (400,000) (1.975, 360) $ (3, 101, 460) Revenues Cost of goods sold Depreciation expense Amortization expense Income from O'Brien Net income Retained earnings 1/1 Net income Dividends declared Retained earnings 12/31 Cash Receivables Inventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings 12/31 Total liabilities and equity 9 O'Brien (608, 000) 272,000 73, 800 0 0 (262, 200) (271, 000) (262, 200) 89,000 (444, 200) 123, 500 58, 200 168,000 0 66, 900 0 275,000 0 691,600 (147, 400) (100, 000) (444, 200) (691, 600) $ $ a. Which Investment method did Patrick use to compute the $245,460 Income from O'Brien? b. Determine the totals to be reported for this business combination for the year ending December 31. c. Verify the totals determined in part (b) by producing a consolidation worksheet for Patrick and O'Brien for the year ending December 31 Complete this question by entering your answers in the tabs below. Required A Required B Required Which investment method did Patrick use to compute the $245,450 income from O'Brien? Which investment method did Patrick use to compute the $245.480 income from O'Brien? Complete this question by entering your answers in the tabs below. Required A Required B Required Determine the totals to be reported for this business combination for the year ending December 31. (Input all amounts as positive values.) Consolidated totals Revenues Cost of goods sold Amortization expense Depreciation expense Income from O'Brien Net income Retained earnings, 1/1 Dividends declared Retained earnings. 12/31 Cash Receivables Inventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equities Complete this question by entering your answers in the tabs below. Required A Required B Required Verify the totals determined in part (b) by producing a consolidation worksheet for Patrick and O'Brien for the year ending December 31. (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. Amounts in the Debit and credit columns should be entered as positive. Input all amounts as positive values.) Show less PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Consolidation Entries Debit Credit Consolidated Totals Patrick O'Brien $ $ (608,000) 272.000 Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Income from O'Brien 73.800 (1,627,500) 434.000 87.000 29,600 (245.460) (1.322.360) 0 0 Net income s S (262,200) Retained earnings, 1/1 Net income (above) Dividends declared (804,000) (1.322.360) 151.000 (1.975,360) (271,000) (262,200) 89.000 Retained earnings. 12/31 s $ (444,200) s $ 123.500 Cash Receivables Inventory Investment in O'Brien Trademarks Customer relationships 223,000 328,000 209,000 841,460 550.000 58.200 168.000 86.900 0 0 275.000 Equipment (net) Goodwill 950.000 0 0 Total assets s 3,101,460 S 691,600 Liabilities Common stock Retained earnings (above) Total liabilities and equity (726.100) (400.000) 1.975,360 (3,101.460) (147,400) (100,000) (444,200) (691,600) $ $