Patrick Corporation acquired 100 percent of OBrien Companys outstanding common stock on January 1, for $637,300 in cash. OBrien reported net assets with a carrying amount of $358,000 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:

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Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1, for $637,300 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 Book Values Fair Values Trademarks (indefinite life) Customer relationships (5-year remaining life) Equipment (10-year remaining life) $75,000 258,000 93,600 301,100 359,000 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 $ (1,822,500) O Brien Revenues Cost of goods sold Depreciation expense Amortization expense Income from O'Brien 486,000 93,000 38,400 (295,578) $ (748,000) 342,000 97,500 $ (1,500,670) $ (764,000) (1,500,670) Net income $ (308,500) Retained earnings 1/1 Net income (345,000) (308,500) Dividends declared 146,000 84,000 Retained earnings 12/31 $ (2,118,670) $ (569,500) Cash Receivables Inventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwil1 279,000 358,000 $ 148,500 77,100 224,000 196,00 935,870 542,000 76, 200 272,000 $ 797,800 1,028,000 Total assets $ 3,338,870 $ (820,200) Liabilities Common stock Retained earnings 12/31 $ (128,300) (100,000) 569,500 $(3,338,870) (797,800) (400,000) 2,118,670(69.so Total liabilities and equity a. Which investment method did Patrick use to compute the $295,570 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