Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $644.300 in cash. O'Brien reported net assets with a carrying amount of $381.000 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: Book Values $ 193, eee Trademarks (indefinite life) Customer relationships (5-year remaining life) Equipment (10-year remaining life) Fair Values $ 225,888 88,500 329,480 360,000 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. O'Brien declared and paid dividends in the same period. Credit balances are indicated by parentheses. O'Brien $ (728,00) 332, ee 99,600 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 Patrick $(1,200,000) 320,00 182,00 35,600 (281,760) $(1,824,160) $ (724,00) (1,824,160) 150,00 $(1,598,160) $ 190,00 414,000 251,800 838, 050 480,000 3 $ (296,488) $ (281, 800) (296,400) 88,899 $ (489, 480) $ 122,500 72,300 221,800 87,800 B 273,800 1,838,888 B $ 3, 211,660 $(1,212,980 (480,00) (1,598,160) $ (3,211,060) $ 775,800 $ (186,400) (180,000) (489, 480) $ (775, 800) .. Which investment method did Patrick use to compute the $281.760 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 December 31 Required A Required B Required C Determine the totals to be reported for this business combination for the year ending December 31. (Input all amounts as positive values.) 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 Consolidated totals s 1.928,000 IS 652,000 S 53,300 s 198,540 0 $ 1,024,100 S 724,000 IS 150,000 S 1.589,160 X IS 312,500 IS 486.300 IS 472.000 20.000 X IS 689,000 IS 70.800 S 1,283,480 83.400 s 3.417.460 X S 1,399,300 S 400.000 IS 1.598,100 $ 3,397,460 Inventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equities Required A Required B Required 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 Accounts Revenues PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Consolidation Entries Patrick O'Brien Debit Credit S (1,200,000) IS (728,000) 320,000 332,000 102,000 99,600 3,060 35,800 0 17,700 (281,760) 0 281,760 IS (1.024,160) (298,400) Cost of goods sold Depreciation expense Amortization expense Income from O'Brien Net income Consolidated Totale s (1.928,000) 652,000 198,540 53,300 0 s (1,024,160) 281,000 724,000) (1,024,160) Retained camnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 (724,000) (1,024,160) 150,000 s (1,598,160) (281,000) (296,400) 88,000 (489,400) 88.000 150,000 s (1,598,160) is IS IS S Cash Receivables 190,000 414,000 251.000 638,060 480,000 122,500 72,300 221,000 906,060 Inventory Investment in O Brien Trademarks Customer relationships Equipment (net) Goodwill 87,000 0 273,000 0 312.500 486,300 472,000 20.000 x 639,000 70.800 1,283,460 83.400 3,417,460 X 88,000 122,000 88,500 3,060 83.400 17,700 30,600 1,038,000 0 Total assets S 3.211,060 IS 775,800 IS (1,212,400) (400,000) 1.596.160 (1,399,300) (400,000) 100,000 Liabilities Common stock Retained eamings (above) Total abilities and cauity (188,400) (100,000) (489,400) (775,800) (1,598,160) s (3,397,460) s (3.211,060) $ IS 1,085,420 s 1,045,420