Patrick Corporation acquired 100 percent of OBrien Companys outstanding common stock on January 1 for $654,200 in cash. OBrien reported net assets with a carrying amount of $418,000 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) $ 97,000 $ 221,000 Customer relationships (5-year remaining life) 0 78,600 Equipment (10-year remaining life) 374,000 327,800 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. OBrien declared and paid dividends in the same period. Credit balances are indicated by parentheses. Patrick O'Brien 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 O'Brien (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 O'Brien 822,500 0 Trademarks 514,000 65,700 Customer relationships 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 ) Which investment method did Patrick use to compute the $271,300 income from O'Brien? 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 Patrick and OBrien for the year ending December 31.