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 0 Trademarks (indefinite life) $ 75,000 Customer relationships (5-year remaining life) Equipment (10-year remaining life) 359,000 Fair Values $ 258,000 93,600 301,100 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 O'Brien $ (748,000) Revenues Cost of goods sold Depreciation expense Amortization expense Income from O'Brien Net income Retained earnings 1/1 Net income Dividends declared Cash Retained earnings 12/31 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 $ (1,822,500) 486,000 93,000 38,400 (295,570) 342,000 97,500 0 0 $ (1,500,670) $ (764,000) (1,500,670) 146,000 $(2,118,670) $ 279,000 $ (308,500) $ (345,000) (308,500) 84,000 $ (569,500) $ 148,500 77,100 224,000 358,000 196,000 935,870 0 542,000 76,200 0 0 1,028,000 272,000 0 0 $ 3,338,870 $ 797,800 $ (820,200) $ (128,300) (400,000) (2,118,670) $(3,338,870) (100,000) (569,500) $ (797,800) 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. 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 $295,570 income from O'Brien? Which investment method did Patrick use to compute the $295,570 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. Totals Revenues Cost of goods sold Amortization expense Depreciation expense Income of 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 Goodwill Total assets Liabilities Common stock Retained earnings, 12/31 Total liabilities and equities $ 3,467,170 < Required A Required C > PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Consolidation Entries Accounts Patrick O'Brien Debit Credit Consolidated Totals Revenues $ (1,822,500) $ (748,000) Cost of goods sold Depreciation expense 486,000 342,000 93,000 97,500 Amortization expense 38,400 0 Income from O'Brien (295,570) 0 Net income $ (1,500,670) $ (308,500) $ 0 Retained earnings, 1/1 (764,000) (345,000) Net income (above) (1,500,670) (308,500) 0 Dividends declared 146,000 84,000 Retained earnings, 12/31 $ (2,118,670) $ (569,500) $ 0 Cash Receivables Inventory Investment in O'Brien $ 279,000 $ 148,500 358,000 77,100 196,000 224,000 935,870 Trademarks Customer relationships Equipment (net) 542,000 0 76,200 0 1,028,000 272,000 Goodwill 0 0 Total assets $ 3,338,870 $ 797,800 $ 0 Liabilities (820,200) (128,300) Common stock (400,000) (100,000) Retained earnings (above) 2,118,670 (569,500) 0 Total liabilities and equity $ (3,338,870) $ (797,800) $ 0 $ 0 $ < Required B Required C >