Reference no: EM13128347
On January 1, 2011 Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $600,000 cash. At January 1 2011, Sedona's net assets had a total carrying amount of $420,000. Equipment (eight-year remaining life) was undervalued on Sedona's financial records by $80,000. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has paid a $20,000 dividend. Sedona recorded income of $70,000 in 2011 and $80,000 in 2012.
Selected account balances from the two companies' individual records were as follows:
Phoenix Sedona
2013 Revenues $498,000 $285,000
2013 Expenses 350,000 195,000
2013 Income from Sedona 55,000
Retained earnings 12/31/13 250,000 175,000
What is consolidated net income for phoenix and Sedona for2013?
a. $148,000
b. $203,000
c. $228,000
d. $238,000
What is Phoenix's consolidated retained earnings balance at December 31, 2013?
a. $250,000
b. $290,000
c. $330,000
d. $360,000
On its December 31, 2013, consolidated balance sheet, what amount should Phoenix report for Sedona's customer list?
a. $10,000
b. $20,000
c. $25,000
d. $50,000
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