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Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $639,300 in cash. O'Brien reported net assets with a

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Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $639,300 in cash. O'Brien reported net assets with a carrying amount of $398,000 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: Trademarks (indefinite life) Customer relationships (5-year remaining life) Equipment (10-year remaining life) Book Values $ 89,000 0 387,000 Fair Values $195,000 102,000 340,800 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. Patrick $(1,155,000) 308,000 95,400 O'Brien $ (572,000) 254,000 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 Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings 12/31 89,700 34,400 0 (212,520) 0 $ (929,720) $ (228,300) $ (744,000) (929,720) 153,000 $(1,520,720) $ 244,000 340,000 182,000 $ (298,000) (228,300) 91,000 $ (435,300) $ 127,500 81,000 232,000 760,820 604,000 1,074,000 0 $ 3,204,820 $(1,284,100) (400,000) (1,520,720) 0 76,200 0 281,000 0 $ 797,700 $ (262,400) (100,000) (435,300)

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