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Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1, for $675,800 in cash, O'Brien reported net assets with a carrying amount of $383,000 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: Trademarks (indefinite life) Customer relationships (5-year remaining life) Equipment (10-year remaining life) Book Fair Values Values $ 79,500 $ 271,500 0 92,700 368,000 318,200 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. 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 Canh Receivables Toventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill Patrick $(1,500,000) 400,000 80,400 28,800 (339,940) $(1,330,740) $ (886,000) (1,330,740) 148,000 $(2,068,740) $ 237,000 370,000 261,000 905,740 618,000 0 1,026,000 0 O'Brien S (784,000) 360,000 70,500 0 0 $ (353,500) 5 (259,000) (353,500) 86,000 $ (526,500) 5 151,000 71,700 203,000 0 75,300 0 332.000 0 VA Inventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill Total assets Liabilities Common stock Retained earnings 12/31 Total liabilities and equity www 261,000 905,740 618,000 0 1,026,000 0 $ 3,417,740 S (949,000) (400,000) (2,068,740) $(3,417,740) HA 203,000 0 75,300 0 332,000 0 $ 833,000 $ (206,500) (100,000) (526,500) $ (833,000) a. Which investment method did Patrick use to compute the $339,940 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 which investment method did Patrick use to compute the $339,940 income from O'Brien? Which investment method did Patrick use to compute the $339,940 income from O'Bnen? STADA Required B > 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 $ 3.624.240 Required A Required B Required 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 Negative amounts for the Consolidated Totals column should be entered with a minus sign.) Show less PATRICK CORPORATION AND CONSOLIDATED SUBSIDIARY O'BRIEN Consolidation Worksheet For Year Ending December 31 Consolidation Entries Consolidated Accounts Patrick O'Brien Debit Credit Totals Revenues $ (1,500,000) $ (784,000) Cost of goods sold 400,000 360,000 Depreciation expense 80,400 70.500 Amortization expense 28,800 0 Income from O'Brien (339,940) 401 Net income $ (1.330,740) $ (353,500) $ 0 Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 0 (886,000) (1,330,740) 148.000 (2,068,740) $ (259,000) (353,500) 86,000 (520,600) $ $ 0 S Cash Receivables 237,000 $ 370.000 151,000 71.7001 20,000 Amoruzawon expense Income from O'Brien (339,940) (1,330,740) $ 0 (353,500) Net income $ $ 0 Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 (886,000) (1,330,740) 148,000 (2,068,740) $ (259,000) (353,500) 86,000 (526,500) $ $ 0 Cash $ Receivables 237,000 $ 370,000 261,000 905,740 618,000 151,000 71,700 203,000 Inventory Investment in O'Brien Trademarks Customer relationships Equipment (net) Goodwill 0 1,026,000 0 3,417,740 S 75.300 0 332,000 0 833, 060 Total assets 5 $ 0 Liabilities Common stock Retained earnings (above) Total liabilities and equity (949,000) (400,000) 2,068,740 (3.417,740) $ (206,500) (100,000) (526,500) (833,000) $ 0 $ OS 0 $ 0

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