Saved Help Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $633,200 in cash. O'Brien reported net assets with a carrying amount of $350,000 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 $ Trademarks (indefinite life) Customer relationships (5-year remaining life) Equipment (10-year remaining life) Fair Values 90,500 $ 255,500 85,200 369,000 320,100 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 $ (836,000) 386,000 91,800 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 Patrick $(1,702,500) 454,000 101,400 28,400 (346,050) $(1,464,750) $ (804,000) (1,464,750) 163,000 $(2,105,750) $ 251,000 308,000 205,000 878,250 632,000 $ (358, 200) (250,000) (358,200) 101,000 $ (507, 200) $ 141,000 63,600 142,000 Cash 79,500 1,000,000 338,000 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 $ 3,274,250 $ (768,500) (400,000) (2,105,750) $(3,274,250) $ 764,100 $ (156,980) (100,000) (507,200) $ (764, 100) Saved Help a. Which investment method did Patrick use to compute the $346,050 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. Complete this question by entering your answers in the tabs below. 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 Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Income from O'Brien Net income PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Consolidation Entries Patrick O'Brien Debit Credit $ (1,702,500) $ (836,000) 454,000 386,000 101,400 91,800 28,400 0 (346,050) 0 (1,464,750) $ (358,200) Retained earnings, 1/1 Net income (above) Dividends declared (804,000) (1,464,750) 163,000 (250,000) (358,200) 101,000 Saved Consolidated Totals Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Income from O'Brien PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Consolidation Entries Patrick O'Brien Debit Credit $ (1,702,500) $ (836,000) 454,000 386,000 101,400 91,800 28,400 0 (346,050) 0 $ (1,464,750) $ (358,200) Net income (250,000) Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 (804,000) (1,464,750) 163,000 (2,105,750) $ (358,200) 101,000 (507,200) $ Cash $ $ 251,000 308,000 205,000 878.250 141,000 63,600 142,000 Receivables Inventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill 632,000 79,500 0 0 1,000,000 338,000 0 764,100 Total assets $ 3,274,250 $ Liabilities Common stock Retained earnings (above) Total liabilities and equity (768,500) (400,000) 2,105,750 (3,274,250) $ (156,900) (100,000) (507,200) (764,100) $ $ 0 $ 0