Kelsey Corporation acquired 100 percent of Snowdon Companys outstanding common stock on January 1 for $654,200 in cash. Snowdon reported net assets with a carrying amount of $418,000 at that time. Some of Snowdons assets either were unrecorded (having been internally developed) or had fair values that differed from book values as follows: Asset Book Values Fair Values Trademarks (indefinite life) $ 97,000 $ 221,000 Software (5-year remaining life) 0 78,600 Equipment (10-year remaining life) 374,000 327,800 No impairment charges occurred 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. Snowdon declared and paid dividends in the same period. Credit balances are indicated by parentheses. Accounts Kelsey Snowdon Revenues $ (1,372,500) $ (688,000) Cost of goods sold 366,000 312,000 Depreciation expense 94,500 93,600 Amortization expense 34,800 0 Income from Snowdon (271,300) 0 Net income $ (1,148,500) $ (282,400) Retained earnings, 1/1 $ (844,000) $ (318,000) Net income (1,148,500) (282,400) Dividends declared 165,000 103,000 Retained earnings, 12/31 $ (1,827,500) $ (497,400) Cash $ 249,000 $ 122,000 Receivables 414,000 85,200 Inventory 258,000 146,000 Investment in Snowdon 822,500 0 Trademarks 514,000 65,700 Software 0 0 Equipment (net) 958,000 328,000 Goodwill 0 0 Total assets $ 3,215,500 $ 746,900 Liabilities $ (988,000) $ (149,500) Common stock (400,000) (100,000) Retained earnings, 12/31 (1,827,500) (497,400) Total liabilities and equity $ (3,215,500) $ (746,900) Required: Which investment method did Kelsey use to compute the $271,300 income from Snowdon? Determine the totals to be reported for this business combination for the year ending December 31. Verify the totals determined in part (b) by producing a consolidation worksheet for Kelsey and Snowdon for the year ending December 31