Patrick Corporation acquired 100 percent of OBrien Companys outstanding common stock on January 1 for $644,300 in cash. OBrien reported net assets with a carrying amount of $381,000 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)	$	103,000	$	225,000
Customer relationships (5-year remaining life)		0		88,500
Equipment (10-year remaining life)		360,000		329,400

	Patrick		O'Brien
Revenues	$	(1,200,000	)		$	(728,000	)
Cost of goods sold		320,000				332,000
Depreciation expense		102,000				99,600
Amortization expense		35,600				0
Income from O'Brien		(281,760	)			0
Net income	$	(1,024,160	)		$	(296,400	)
Retained earnings 1/1	$	(724,000	)		$	(281,000	)
Net income		(1,024,160	)			(296,400	)
Dividends declared		150,000				88,000
Retained earnings 12/31	$	(1,598,160	)		$	(489,400	)
Cash	$	190,000			$	122,500
Receivables		414,000				72,300
Inventory		251,000				221,000
Investment in O'Brien		838,060				0
Trademarks		480,000				87,000
Customer relationships		0				0
Equipment (net)		1,038,000				273,000
Goodwill		0				0
Total assets	$	3,211,060			$	775,800
Liabilities	$	(1,212,900	)		$	(186,400	)
Common stock		(400,000	)			(100,000	)
Retained earnings 12/31		(1,598,160	)			(489,400	)
Total liabilities and equity	$	(3,211,060	)		$	(775,800	)

Which investment method did Patrick use to compute the $281,760 income from O'Brien?

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

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

PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN
Consolidation Worksheet
For Year Ending December 31
			Consolidation Entries	Consolidated
Accounts	Patrick	OBrien	Debit	Credit	Totals
Revenues	$(1,200,000)	$(728,000)
Cost of goods sold	320,000	332,000
Depreciation expense	102,000	99,600
Amortization expense	35,600	0
Income from OBrien	(281,760)	0
Net income	$(1,024,160)	$(296,400)
Retained earnings, 1/1	(724,000)	(281,000)
Net income (above)	(1,024,160)	(296,400)
Dividends declared	150,000	88,000
Retained earnings, 12/31	$(1,598,160)	$(489,400)
Cash	$190,000	$122,500
Receivables	414,000	72,300
Inventory	251,000	221,000
Investment in OBrien	838,060
Trademarks	480,000	87,000
Customer relationships	0	0
Equipment (net)	1,038,000	273,000
Goodwill	0	0
Total assets	$3,211,060	$775,800
Liabilities	(1,212,900)	(186,400)
Common stock	(400,000)	(100,000)
Retained earnings (above)	(1,598,160)	(489,400)
Total liabilities and equity	$(3,211,060)	$(775,800)	$0	$0

Determine the totals to be reported for this business combination for the year ending December 31. (Input all amounts as positive values.)

	Consolidated totals
Revenues
Cost of goods sold
Amortization expense
Depreciation expense
Income from O'Brien
Net income
Retained earnings, 1/1
Dividends declared
Retained earnings, 12/31
Cash
Receivables
Inventory
Investment in OBrien
Trademarks
Customer relationships
Equipment (net)
Goodwill
Total assets
Liabilities
Common stock
Retained earnings, 12/31
Total liabilities and equities

Which investment method did Patrick use to compute the $281,760 income from O'Brien?

	Which investment method did Patrick use to compute the $281,760 income from O'Brien?