Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $711,300 in cash. O'Brien reported net assets with a carrying amount of $396,000 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: Trademarks (indefinite life) Customer relationships (5-year remaining life) Equipment (10-year remaining life) Book Values $ 107,000 0 393,000 Fair Values $ 299,000 104,400 340, 800 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'Brien declared and paid dividends in the same period. Credit balances are indicated by parentheses. Patrick $(1,380,000) 368,000 104,700 36,800 (278,940) $(1,149,440) $ (794,000) (1,149,440) 166,000 $(1,777,440) 242,000 338,000 246,000 886, 240 526,000 0 928,000 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 $ O'Brien $ (704,000) 320,000 89,400 0 0 $ (294,600) $ (296,000 (294,600) 104,000 $ (486,600) $ 121,000 57,900 186,000 83,700 0 281,000 0 $ 729,600 $ (143,000) (100,000) (486,600) $ (729,600) $ 3, 166, 240 $ (988, 800) (400,000) (1,777,440) $(3, 166, 240) a. Which investment method did Patrick use to compute the $278,940 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 C Which investment method did Patrick use to compute the $278,940 income from O'Brien? Which investment method did Patrick use to compute the $278,940 income from O'Brien? Required A Required B > Required A Required B Required C 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 Consolidated Accounts Totals Revenues PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Consolidation Entries Patrick O'Brien Debit Credit $ (1,380,000) $ (704,000) 368,000 320,000 104,700 89,400 36,800 0 (278,940) 0 $ (1,149,440) $ (294,600) Cost of goods sold Depreciation expense Amortization expense Income from O'Brien Net income Retained earnings, 1/1 Net income (above) (794,000) (1,149,440) 166,000 (1,777,440) $ (296,000) (294,600) 104,000 (486,600) Dividends declared Retained earnings, 12/31 $ $ Cash $ $ 121,000 57,900 242,000 338,000 246,000 886,240 Receivables Inventory Investment in O'Brien Trademarks 186,000 526,000 83,700 0 0 Customer relationships Equipment (net) Goodwill 928,000 281,000 0 0 729,600 Total assets $ 3,166,240 $ Liabilities Common stock (988,800) (400,000) 1,777,440 (3,166,240) $ (143,000) (100,000) (486,600) (729,600) Retained earnings (above) Total liabilities and equity $