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Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1 for $617,900 in cash O'Brien reported net assets with a carrying amount of $393,000 at that time. Some of O'Brien's assets either were unrecorde (having been internally developed) or had fair values that differed from book values as follows: Trademarks (indefinite life) Customer relationships (5-year remaining life) Equipment (10-year remaining life) Book Values $ 69,000 0 346,000 Fair Values $ 176,000 90,900 293, 200 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. 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 $(1,177,500) 314,000 92,100 42,600 (329,400) $(1,058,200) $ (736, 000) (1,058,200) 156,000 $(1,638,200) $ 267,000 416,000 184,000 853,300 568,000 0 1, 120,000 0 $ 3,408,300 $(1,370, 100) (400,000) (1,638,200) $(3, 408,300) O'Brien $ (800,000) 368,000 89,700 0 0 $ (342,300) $ (293,000) (342, 300) 94,000 $ (541,300) $ 136,000 66,300 167,000 0 65,700 0 349,000 0 $ 784,000 $ (142,700) (100,000) (541,300) $ (784,000) a. Which investment method did Patrick use to compute the $329,400 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 Which investment method did Patrick use to compute the $329,400 income from O'Brien? Which investment method did Patrick use to compute the $329,400 income from O'Brien? Required A Required B > Complete this question by entering your answers in the tabs below. 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.) 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 O'Brien Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equities 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 PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Consolidation Entries Accounts Patrick O'Brien Debit Credit Revenues $ (1,177,500) $ (800,000) Cost of goods sold 314,000 368,000 Depreciation expense 92,100 89,700 Amortization expense 42,600 0 Income from O'Brien (329,400) 0 Net income $ (1,058,200) $ (342,300) Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 (736,000) (1,058,200) 156,000 (1,638,200) (293,000) (342,300) 94,000 $ $ (541,300) Cash $ $ 136,000 267,000 416,000 Receivables 66,300 167,000 Inventory Investment in O'Brien Trademarks 184,000 853,300 568,000 65,700 0 0 1,120,000 349,000 Customer relationships Equipment (net) Goodwill Total assets 0 0 $ 3,408,300 $ 784,000 Liabilities Common stock Retained earnings (above) Total liabilities and equity (1,370,100) (400,000) 1,638,200 (3,408,300) (142,700) (100,000) (541,300) (784,000) $ $
