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Item 4

Patrick Corporation acquired 100 percent of OBrien Companys outstanding common stock on January 1 for $550,000 in cash. OBrien reported net assets with a carrying amount of $350,000 at that time. Some of OBriens assets either were unrecorded (having been internally developed) or had fair values that differed from book values as follows:

	Book Values		Fair Values
Trademarks (indefinite life)	$	60,000	$	160,000
Customer relationships (5-year remaining life)		0		75,000
Equipment (10-year remaining life)		342,000		312,000

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. OBrien declared and paid dividends in the same period. Credit balances are indicated by parentheses.

	Patrick				O'Brien
Revenues	$	(1,125,000	)		$	(520,000	)
Cost of goods sold		300,000				228,000
Depreciation expense		75,000				70,000
Amortization expense		25,000				0
Income from O'Brien		(210,000	)			0
Net income	$	(935,000	)		$	(222,000	)
Retained earnings 1/1	$	(700,000	)		$	(250,000	)
Net income		(935,000	)			(222,000	)
Dividends declared		142,000				80,000
Retained earnings 12/31	$	(1,493,000	)		$	(392,000	)
Cash	$	185,000			$	105,000
Receivables		225,000				56,000
Inventory		175,000				135,000
Investment in O'Brien		680,000				0
Trademarks		474,000				60,000
Customer relationships		0				0
Equipment (net)		925,000				272,000
Goodwill		0				0
Total assets	$	2,664,000			$	628,000
Liabilities	$	(771,000	)		$	(136,000	)
Common stock		(400,000	)			(100,000	)
Retained earnings 12/31		(1,493,000	)			(392,000	)
Total liabilities and equity	$	(2,664,000	)		$	(628,000	)

1. Which investment method did Patrick use to compute the $210,000 income from O'Brien?

2. Determine the totals to be reported for this business combination for the year ending December 31.

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 OBrien
Trademarks
Customer relationships
Equipment (net)
Goodwill
Total assets
Liabilities
Common stock
Retained earnings, 12/31
Total liabilities and equities