Patrick Corporation acquired 100 percent of OBrien Companys outstanding common stock on January 1 for $642,600 in cash. OBrien reported net assets with a carrying amount of $426,000 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)	$	80,000	$	194,000
Customer relationships (5-year remaining life)		0		98,100
Equipment (10-year remaining life)		390,000		333,000

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. OBrien declared and paid dividends in the same period. Credit balances are indicated by parentheses.

	Patrick				O'Brien
Revenues	$	(1,552,500	)		$	(876,000	)
Cost of goods sold		414,000				406,000
Depreciation expense		91,200				75,000
Amortization expense		37,600				0
Income from O'Brien		(381,080	)			0
Net income	$	(1,390,780	)		$	(395,000	)
Retained earnings 1/1	$	(728,000	)		$	(326,000	)
Net income		(1,390,780	)			(395,000	)
Dividends declared		159,000				97,000
Retained earnings 12/31	$	(1,959,780	)		$	(624,000	)
Cash	$	233,000			$	138,500
Receivables		376,000				56,700
Inventory		253,000				160,000
Investment in O'Brien		926,680				0
Trademarks		564,000				78,900
Customer relationships		0				0
Equipment (net)		1,110,000				326,000
Goodwill		0				0
Total assets	$	3,462,680			$	760,100
Liabilities	$	(1,102,900	)		$	(36,100	)
Common stock		(400,000	)			(100,000	)
Retained earnings 12/31		(1,959,780	)			(624,000	)
Total liabilities and equity	$	(3,462,680	)		$	(760,100	)

1. Which investment method did Patrick use to compute the $381,080 income from O'Brien?

2. Determine the totals to be reported for this business combination for the year ending December 31.

3. Verify the totals determined in part (b) by producing a consolidation worksheet for Patrick and OBrien for the year ending December 31.

Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the totals to be reported for this business combination for the year ending December 31. Totals Revenues Cost of goods sold Amortization expense Depreciation expense Income of O'Brien Net income Retained earnings, 1/1 Dividends declared Required C > Retained earnings, 12/31 Cash Receivables Inventory Investment in O'Brien Trademarks Customer relationships Equipment Goodwill Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equities $ 3,467,170