Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1, for $598,100 in cash. O'Brien reported net assets with a carrying amount of $358,000 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 $ 100,500 0 436,000 Fair Values $ 230,500 86,100 401,500 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. O'Brien declared and paid dividends in the same period. Credit balances are indicated by parentheses. Patrick $(1,327,500) 354,000 99,300 32,000 (198,830) $(1,041,030) O'Brien $ (528,000) 232,000 83,400 $ (212,600) $ (838,000) (1,041,030) 164,000 $(1,715,030) $ (281,000) (212,600) 102,000 $ (391,600) $ 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 Total liabilities and equity 220,000 378,000 177,000 717,930 666,000 147,500 85,200 202,000 88,500 1,100,000 296,000 $ 819,200 $ 3,258,930 $ (1,143,900) (400,000) (1,715,030) $ (3, 258,930) $ (327,600) (100,000) (391,600) $ (819, 200) a. Which investment method did Patrick use to compute the $198,830 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 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 1,855,500 586,000 Revenues Cost of goods sold Amortization expense Depreciation expense Income of 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 Goodwill Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equities $ 3,586,530 Verify the totals determined in part (b) by producing a consolidation worksheet for Patrick and O'Brien for the year ending December 31. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Consolidated Totals column should be entered with a minus sign.) Show less Consolidated Totals Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Income from O'Brien Net income PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Consolidation Entries Patrick O'Brien Debit Credit $ (1,327,500) $ (528,000) 354,000 232,000 99,300 83,400 32,000 (198,830) $ (1,041,030) $ (212,600) Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 (838,000) (1,041,030) 164,000 (1,715,030) (281,000) (212,600) 102,000 (391,600) $ $ $ Cash Receivables Inventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill Total assets 220,000 378,000 177,000 717,930 666,000 147,500 85,200 202,000 88,500 0 1,100,000 ol 296,000 01 819,200 $ 3,258,930 $ $ Liabilities Common stock Retained earnings (above) Total liabilities and equity (1,143,900) (400,000) 1,715,030 (3,258,930) (327,600) (100,000) (391,600) (819,200) | | $ $ $ o s o l o
