Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $702,600 in cash. O'Brien reported net assets with a carrying amount of $416,000 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) $ 92,000 Customer relationships (5-year remaining life) Equipment (10-year remaining life) 352,000 Fair Values $270,000 95,400 292,300 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 Patrick $(1,612,500) 430,000 83,400 O'Brien $ (832,000) 384,000 71,100 0 0 39,400 (363,790) $ (1,423,490) $ (778,000) (1,423,490) 155,000 $(2,046,490) $ (376,900) $ (316,000) (376,900) 93,000 $ (599,900) $ 123,500 Retained earnings 12/31 Cash $ Receivables 195,000 400,000 Inventory 203,000 59,700 137,000 Customer relationships Liabilities Investment in O'Brien Trademarks Equipment (net) Goodwill Total assets Common stock Retained earnings 12/31 973,390 486,000 69,600 0 990,000 366,000 $ 3,247,390 $ 755,800 $ (800,900) $ (55,900) Total liabilities and equity (400,000) (2,046,490) $(3,247,390) (100,000) (599,900) $ (755,800) a. Which investment method did Patrick use to compute the $363,790 income from O'Brien? b. Determine the totals to be reported for this business combination for the year ending December 31.