Patrick Corporation acquired 100 percent of O’Brien Company’soutstanding common stock on January 1, for $796,500 in cash.O’Brien reported net assets with a carrying amount of $448,000 atthat time. Some of O’Brien’s assets either were unrecorded (havingbeen internally developed) or had fair values that differed frombook values as follows: Book Values Fair Values Trademarks(indefinite life) $ 102,000 $ 299,000 Customer relationships(5-year remaining life) 0 96,600 Equipment (10-year remaining life)359,000 329,000 Any goodwill is considered to have an indefinitelife with no impairment charges during the year. Following arefinancial statements at the end of the first year for these twocompanies prepared from their separately maintained accountingsystems. O’Brien declared and paid dividends in the same period.Credit balances are indicated by parentheses. Patrick O'BrienRevenues $ (1,815,000 ) $ (856,000 ) Cost of goods sold 484,000396,000 Depreciation expense 104,100 95,400 Amortization expense28,200 0 Income from O'Brien (348,280 ) 0 Net income $ (1,546,980 )$ (364,600 ) Retained earnings 1/1 $ (764,000 ) $ (312,000 ) Netincome (1,546,980 ) (364,600 ) Dividends declared 154,000 92,000Retained earnings 12/31 $ (2,156,980 ) $ (584,600 ) Cash $ 238,000$ 121,000 Receivables 322,000 68,400 Inventory 202,000 168,000Investment in O'Brien 1,016,780 0 Trademarks 518,000 79,800Customer relationships 0 0 Equipment (net) 944,000 276,000 Goodwill0 0 Total assets $ 3,240,780 $ 713,200 Liabilities $ (683,800 ) $(28,600 ) Common stock (400,000 ) (100,000 ) Retained earnings12/31 (2,156,980 ) (584,600 ) Total liabilities and equity $(3,240,780 ) $ (713,200 ) Which investment method did Patrick useto compute the $348,280 income from O'Brien? Determine the totalsto be reported for this business combination for the year endingDecember 31. Verify the totals determined in part (b) by producinga consolidation worksheet for Patrick and O’Brien for the yearending December 31. Patrick Corporation acquired 100 percent ofO’Brien Company’s outstanding common stock on January 1, for$796,500 in cash. O’Brien reported net assets with a carryingamount of $448,000 at that time. Some of O’Brien’s assets eitherwere unrecorded (having been internally developed) or had fairvalues that differed from book values as follows: Book Values FairValues Trademarks (indefinite life) $ 102,000 $ 299,000 Customerrelationships (5-year remaining life) 0 96,600 Equipment (10-yearremaining life) 359,000 329,000 Any goodwill is considered to havean indefinite life with no impairment charges during the year.Following are financial statements at the end of the first year forthese two companies prepared from their separately maintainedaccounting systems. O’Brien declared and paid dividends in the sameperiod. Credit balances are indicated by parentheses. PatrickO'Brien Revenues $ (1,815,000 ) $ (856,000 ) Cost of goods sold484,000 396,000 Depreciation expense 104,100 95,400 Amortizationexpense 28,200 0 Income from O'Brien (348,280 ) 0 Net income $(1,546,980 ) $ (364,600 ) Retained earnings 1/1 $ (764,000 ) $(312,000 ) Net income (1,546,980 ) (364,600 ) Dividends declared154,000 92,000 Retained earnings 12/31 $ (2,156,980 ) $ (584,600 )Cash $ 238,000 $ 121,000 Receivables 322,000 68,400 Inventory202,000 168,000 Investment in O'Brien 1,016,780 0 Trademarks518,000 79,800 Customer relationships 0 0 Equipment (net) 944,000276,000 Goodwill 0 0 Total assets $ 3,240,780 $ 713,200 Liabilities$ (683,800 ) $ (28,600 ) Common stock (400,000 ) (100,000 )Retained earnings 12/31 (2,156,980 ) (584,600 ) Total liabilitiesand equity $ (3,240,780 ) $ (713,200 ) Which investment method didPatrick use to compute the $348,280 income from O'Brien? Determinethe totals to be reported for this business combination for theyear ending December 31. Verify the totals determined in part (b)by producing a consolidation worksheet for Patrick and O’Brien forthe year ending December 31. Patrick Corporation acquired 100percent of O’Brien Company’s outstanding common stock on January 1,for $796,500 in cash. O’Brien reported net assets with a carryingamount of $448,000 at that time. Some of O’Brien’s assets eitherwere unrecorded (having been internally developed) or had fairvalues that differed from book values as follows: Book Values FairValues Trademarks (indefinite life) $ 102,000 $ 299,000 Customerrelationships (5-year remaining life) 0 96,600 Equipment (10-yearremaining life) 359,000 329,000 Any goodwill is considered to havean indefinite life with no impairment charges during the year.Following are financial statements at the end of the first year forthese two companies prepared from their separately maintainedaccounting systems. O’Brien declared and paid dividends in the sameperiod. Credit balances are indicated by parentheses. PatrickO'Brien Revenues $ (1,815,000 ) $ (856,000 ) Cost of goods sold484,000 396,000 Depreciation expense 104,100 95,400 Amortizationexpense 28,200 0 Income from O'Brien (348,280 ) 0 Net income $(1,546,980 ) $ (364,600 ) Retained earnings 1/1 $ (764,000 ) $(312,000 ) Net income (1,546,980 ) (364,600 ) Dividends declared154,000 92,000 Retained earnings 12/31 $ (2,156,980 ) $ (584,600 )Cash $ 238,000 $ 121,000 Receivables 322,000 68,400 Inventory202,000 168,000 Investment in O'Brien 1,016,780 0 Trademarks518,000 79,800 Customer relationships 0 0 Equipment (net) 944,000276,000 Goodwill 0 0 Total assets $ 3,240,780 $ 713,200 Liabilities$ (683,800 ) $ (28,600 ) Common stock (400,000 ) (100,000 )Retained earnings 12/31 (2,156,980 ) (584,600 ) Total liabilitiesand equity $ (3,240,780 ) $ (713,200 ) Which investment method didPatrick use to compute the $348,280 income from O'Brien? Determinethe totals to be reported for this business combination for theyear ending December 31. Verify the totals determined in part (b)by producing a consolidation worksheet for Patrick and O’Brien forthe year ending December 31. Patrick Corporation acquired 100percent of O’Brien Company’s outstanding common stock on January 1,for $796,500 in cash. O’Brien reported net assets with a carryingamount of $448,000 at that time. Some of O’Brien’s assets eitherwere unrecorded (having been internally developed) or had fairvalues that differed from book values as follows: Book Values FairValues Trademarks (indefinite life) $ 102,000 $ 299,000 Customerrelationships (5-year remaining life) 0 96,600 Equipment (10-yearremaining life) 359,000 329,000 Any goodwill is considered to havean indefinite life with no impairment charges during the year.Following are financial statements at the end of the first year forthese two companies prepared from their separately maintainedaccounting systems. O’Brien declared and paid dividends in the sameperiod. Credit balances are indicated by parentheses. PatrickO'Brien Revenues $ (1,815,000 ) $ (856,000 ) Cost of goods sold484,000 396,000 Depreciation expense 104,100 95,400 Amortizationexpense 28,200 0 Income from O'Brien (348,280 ) 0 Net income $(1,546,980 ) $ (364,600 ) Retained earnings 1/1 $ (764,000 ) $(312,000 ) Net income (1,546,980 ) (364,600 ) Dividends declared154,000 92,000 Retained earnings 12/31 $ (2,156,980 ) $ (584,600 )Cash $ 238,000 $ 121,000 Receivables 322,000 68,400 Inventory202,000 168,000 Investment in O'Brien 1,016,780 0 Trademarks518,000 79,800 Customer relationships 0 0 Equipment (net) 944,000276,000 Goodwill 0 0 Total assets $ 3,240,780 $ 713,200 Liabilities$ (683,800 ) $ (28,600 ) Common stock (400,000 ) (100,000 )Retained earnings 12/31 (2,156,980 ) (584,600 ) Total liabilitiesand equity $ (3,240,780 ) $ (713,200 ) Which investment method didPatrick use to compute the $348,280 income from O'Brien? Determinethe totals to be reported for this business combination for theyear ending December 31. Verify the totals determined in part (b)by producing a consolidation worksheet for Patrick and O’Brien forthe year ending December 31. Patrick Corporation acquired 100percent of O’Brien Company’s outstanding common stock on January 1,for $796,500 in cash. O’Brien reported net assets with a carryingamount of $448,000 at that time. Some of O’Brien’s assets eitherwere unrecorded (having been internally developed) or had fairvalues that differed from book values as follows: Book Values FairValues Trademarks (indefinite life) $ 102,000 $ 299,000 Customerrelationships (5-year remaining life) 0 96,600 Equipment (10-yearremaining life) 359,000 329,000 Any goodwill is considered to havean indefinite life with no impairment charges during the year.Following are financial statements at the end of the first year forthese two companies prepared from their separately maintainedaccounting systems. O’Brien declared and paid dividends in the sameperiod. Credit balances are indicated by parentheses. PatrickO'Brien Revenues $ (1,815,000 ) $ (856,000 ) Cost of goods sold484,000 396,000 Depreciation expense 104,100 95,400 Amortizationexpense 28,200 0 Income from O'Brien (348,280 ) 0 Net income $(1,546,980 ) $ (364,600 ) Retained earnings 1/1 $ (764,000 ) $(312,000 ) Net income (1,546,980 ) (364,600 ) Dividends declared154,000 92,000 Retained earnings 12/31 $ (2,156,980 ) $ (584,600 )Cash $ 238,000 $ 121,000 Receivables 322,000 68,400 Inventory202,000 168,000 Investment in O'Brien 1,016,780 0 Trademarks518,000 79,800 Customer relationships 0 0 Equipment (net) 944,000276,000 Goodwill 0 0 Total assets $ 3,240,780 $ 713,200 Liabilities$ (683,800 ) $ (28,600 ) Common stock (400,000 ) (100,000 )Retained earnings 12/31 (2,156,980 ) (584,600 ) Total liabilitiesand equity $ (3,240,780 ) $ (713,200 ) Which investment method didPatrick use to compute the $348,280 income from O'Brien? Determinethe totals to be reported for this business combination for theyear ending December 31. Verify the totals determined in part (b)by producing a consolidation worksheet for Patrick and O’Brien forthe year ending December 31.