Patrick Corporation acquired 100 percent of OBrien Companys outstanding common stock on January 1, for $646,100 in cash. OBrien reported net assets with a carrying amount of $406,000 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) $ 78,000 $ 214,000 Customer relationships (5-year remaining life) 0 80,700 Equipment (10-year remaining life) 420,000 371,700 Any goodwill is considered to have an indefinite life with no impairment charges during the year. 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 $ (1,177,500 ) $ (652,000 ) Cost of goods sold 314,000 294,000 Depreciation expense 84,000 85,800 Amortization expense 34,800 0 Income from O'Brien (260,890 ) 0 Net income $ (1,005,590 ) $ (272,200 ) Retained earnings 1/1 $ (840,000 ) $ (320,000 ) Net income (1,005,590 ) (272,200 ) Dividends declared 149,000 87,000 Retained earnings 12/31 $ (1,696,590 ) $ (505,200 ) Cash $ 269,000 $ 125,000 Receivables 398,000 72,600 Inventory 236,000 190,000 Investment in O'Brien 833,990 0 Trademarks 548,000 83,400 Customer relationships 0 0 Equipment (net) 968,000 314,000 Goodwill 0 0 Total assets $ 3,252,990 $ 785,000 Liabilities $ (1,156,400 ) $ (179,800 ) Common stock (400,000 ) (100,000 ) Retained earnings 12/31 (1,696,590 ) (505,200 ) Total liabilities and equity $ (3,252,990 ) $ (785,000 ) Which investment method did Patrick use to compute the $260,890 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.