Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $617.900 in cash. O'Brien reported net assets with a carrying amount of $393,000 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 Fain Values Trademarks (indefinite life) $ 69,000 $176,000 Customer relationships (5-year remaining life) Equipment (10-year remaining life) 90,900 346,000 293,200 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 incom Retained earnings 1/11 Net incone Dividends declared Cash Retained earnings 12/31 Receivables Inventory Tevestment in O'Brien Patrick $(1,177,500) O'Brien $ (800,000) 314,000 92,100 42,600. (329,400) $(1,058,200) $ (736,000) (1,058,200) 156,000 $(1,638,200) $ 368,000 89,700 $ (342,300) $ (293,000) (342,300) 94,000 $ (541,300) 267,000 416,000 $ 136,000 66,300 184,000 167,000 9 E Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings 12/31 Total liabilities and equity 853,300 568,000 0 1,120,000 $ 3,408,300 $(1,370,100) (400,000) (1,638,200) $(3,408,300) 65,700. 349,000 0 0 $ 784,000 $ (142,700) (100,000) (541,300) $ (784,000) a. Which investment method did Patrick use to compute the $329,400 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 $329,400 income from O'Brien? Which investment method did Patrick use to compute the $329,400 income from O'Brien? Required A Required B > 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 totals 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 Cost of goods sold Depreciation expense $ (1,177,500) $ (800,000) 314,000 368,000 92,100 89,700 Amortization expense 42,600 0 Income from O'Brien (329,400) 0 Net income $ (1,058,200) $ (342,300) Retained earnings, 1/1 (736,000) (293,000) Net income (above) (1,058,200) (342,300) Dividends declared 156,000. 94,000 Retained eamings, 12/31 $ (1,638,200) $ (541,300) Cash $ 267,000 $ 136,000 Receivables 416,000 66,300 Inventory 184,000 167,000 Investment in O'Brien 853,300 Trademarks 568,000 65,700 Customer relationships 0 0 4 Retained eamings, 12/31 $ (1,638,200) $ (541,300) Cash Receivables Inventory Investment in O'Brien Trademarks $ 267,000 $ 136,000 416,000 66,300 184,000 167,000 853,300 568,000 65,700 Customer relationships 0 0 Equipment (net) 1,120,000 Goodwill 0 349,000 0 Total assets $ 3,408,300 $ 784,000 Liabilities (1,370,100) (142,700) Common stock (400,000) (100,000) Retained earnings (above) (1,638,200) (541,300) Total liabilities and equity $ (3,408,300) $ (784,000)