Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $642,600 in cash. O'Brien reported net assets with a carrying amount of $426,000 at that time. Some of O'Brien's assets either were unrecorded thaving 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 Fair Values Values $ 80,000 $ 194,000 98, 100 390,000 333,000 2242:09 bok Any goodwill is considered to have an indefinite life with no imporment 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. orices O'Brien $ (876,000) 406,000 75,000 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 Trademark Patrick $(1,552,500) 414,000 91,200 37,600 (381 080) $(1,390,780) $(728,000) (1,390,780) 159,000 $(1,959,780) $ 233,000 376,000 253,000 926,680 564 ARA $ (395,000) $ (326,000) (395,000) 97,000 $ (624,000) 5 138,500 56,700 160,000 7R GA Next 926,680 564,000 1,110, eee 78,900 326,000 Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings 12/31 Total liabilities and equity $ 3,462,680 $(1,182,900) (480,000) (1,959,788) $(3,462,680) $ 760, 100 $ (36,100) (180,000) (624,000) $ (760, 100) a. Which investment method did Patrick use to compute the $381,080 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 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.) Prov Next Verity the totals determined in part (6) 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.) Show less Consolidated Totals Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Income from O'Brien Net income PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Consolidation Entries Patrick O'Brien Debit Credit $ (1,552,500) $ (876,000) 414,000 406,000 91,200 75,000 37.600 0 (381,080) 0 $ (1.390.780) $ (395,000) Retained earnings, 1/1 Net Income (above) Dividends declared Retained earnings, 12/31 (728,000) (1.390,780) 159,000 $ (1,959,780) S (326,000) (395,000) 97,000 (624,000) Prev 1 of 1 !!! Next Retained earings, 12/31 $ (1,959,780) $ (624,000) $ 138,500 56,700 160,000 Cash Receivables Inventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill 233,000 $ 376,000 253,000 926,680 564,000 0 1.110,000 0 3,462,680 $ 78,900 0 326,000 0 Total assets $ 760,100 Liabilities Common stock Retained earnings (above) Total liabilities and equity (1,102,900) (400,000) 1,959,780 $ (3,462,680) $ (36,100) (100,000) (624,000) (760,100)