Patrick Corporation acquired 100 percent of OBrien Companys outstanding common stock on January 1 for $639,000 in cash. OBrien reported net assets with a carrying amount of $374,000 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)	$	101,500	$	249,500
Customer relationships (5-year remaining life)		0		91,200
Equipment (10-year remaining life)		364,000		323,800

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	$	(1,305,000	)		$	(828,000	)
Cost of goods sold		348,000				382,000
Depreciation expense		82,200				95,400
Amortization expense		32,200				0
Income from O'Brien		(336,380	)			0
Net income	$	(1,178,980	)		$	(350,600	)
Retained earnings 1/1	$	(882,000	)		$	(274,000	)
Net income		(1,178,980	)			(350,600	)
Dividends declared		160,000				98,000
Retained earnings 12/31	$	(1,900,980	)		$	(526,600	)
Cash	$	208,000			$	121,000
Receivables		416,000				78,900
Inventory		269,000				139,000
Investment in O'Brien		877,380				0
Trademarks		480,000				64,200
Customer relationships		0				0
Equipment (net)		1,014,000				292,000
Goodwill		0				0
Total assets	$	3,264,380			$	695,100
Liabilities	$	(963,400	)		$	(68,500	)
Common stock		(400,000	)			(100,000	)
Retained earnings 12/31		(1,900,980	)			(526,600	)
Total liabilities and equity	$	(3,264,380	)		$	(695,100	)

Which investment method did Patrick use to compute the $336,380 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 December 31.