Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $654,200 in cash. O'Brien reported net assets with a carrying amount of $418,000 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: Book Values Trademarks (indefinite life) Customer relationships (5-year remaining life) Equipment (10-year remaining life) $ 97,000 0 374,000 Fair Values $ 221,000 78,600 327,800 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. O'Brien declared and paid dividends in the same period. Credit balances are indicated by parentheses. Revenues Cost of goods sold Depreciation expense Amortization expense Income from O'Brien Net income Retained earnings 1/1 Net income Dividends declared Inventory Patrick $ (1,372,500) 366,000 94,500 34,800 (271,300) $ (1,148,500) $ (844,000) (1,148,500) 165,000 O'Brien $ (688,000) 312,000 93,600 0 0 $ (282,400) $ (318,000) (282,400) 103,000 $ (497,400) $ 122,000 85,200 146,000 Retained earnings 12/31 $ (1,827,500) Cash Receivables Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings 12/31 Total liabilities and equity $ 249,000 414,000 258,000 822,500 0 514,000 65,700 0 0 958,000 328,000 0 $ $ 3,215,500 $ (988,000) (400,000) (1,827,500) $(3,215,500) 746,900 $ (149,500) (100,000) (497,400) $ (746,900) < Prev 1 of 1 Next > a. Which investment method did Patrick use to compute the $271,300 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 $271,300 income from O'Brien? Which investment method did Patrick use to compute the $271,300 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.) 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 Consolidated totals Retained earnings, 12/31 Total liabilities and equities < Required A Required C > Complete this question by entering your answers in the tabs below. Required A Required B Required C 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.) PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Accounts Patrick O'Brien Debit Consolidation Entries Credit Consolidated Totals 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 (above) (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 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 (above) (1,827,500) (497,400) Total liabilities and equity $ (3,215,500) $ (746,900) < Required B Required C Show less