Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $617,000 in cash. O'Brien reported net assets with a carrying amount of $351,000 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 $ 66,000 0 417,000 Fair Values $206,000 83,400 384,600 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 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 Patrick O'Brien $(1, 192,500) $ (776,000) 318,000 356,000 91,500 92,400 28,400 0 (314,160) 0 $(1,068,760) $ (327,600) $ (786,000) $ (251,000) (1,068,760) (327,600) 143,000 81,000 $(1,711,760) $ (497,600) $ 207,000 $ 114,500 370,000 76,200 188,000 169,000 850, 160 0 498,000 75,900 0 0 978,000 283,000 0 $ 3,091,160 $ 718,600 $ (979,400) $ (121,000) (400,000) (100,000) (1,711,760) (497,600) $ (3,091,160) $ (718, 600) a. Which investment method did Patrick use to compute the $314,160 income from 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 December 31. Complete this question by entering your answers in the tabs below. Required A Required B Required C Which investment method did Patrick use to compute the $314,160 income from O'Brien? Which investment method did Patrick use to compute the $314,160 income from O'Brien? Required A Required B Required C 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. Input all amounts as positive values.) Show less A Consolidated Totals PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Consolidation Entries Accounts Patrick O'Brien Debit Credit Revenues $ (1,192,500) $ (776,000) Cost of goods sold 318,000 356,000 Depreciation expense 91,500 92,400 Amortization expense 28,400 0 Income from O'Brien (314,160) 0 Net income $ (1,068,760) $ (327,600) Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 (786,000) (1,068,760) 143,000 $ (1,711,760) $ (251,000) (327,600) 81,000 (497,600) Cash $ 207,000 $ 370,000 114,500 76,200 169,000 188,000 Receivables Inventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill 850, 160 498,000 75,900 0 978,000 283,000 0 0 Total assets $ 3,091,160 $ 718,600 Liabilities Common stock (979,400) (400,000) 1,711,760 $ (3,091,160) $ (121,000) (100,000) (497,600) (718,600) Retained earnings (above) Total liabilities and equity $ 0 $ 0