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Homework answers / question archive / Required information On January 1, 2016, Phoenix Co
acquired 100 percent of the outstanding voting shares of Sedona Inc. for $600,000 cash. At January 1, 2016, 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 declared a $20,000 dividend. Sedona recorded net income of $70,000 in 2016 and $80,000 in 2017.
Selected account balances from the two companies' individual records were as follows:
Phoenix Sedona 2018 Revenues $ 498,000 $ 285,000 2018 Expenses 350,000 195,000 2018 Income from Sedona 55,000 Retained earnings 12/31/18 250,000 175,000
What is consolidated net income for Phoenix and Sedona for 2018?
Multiple Choice
- $238,000
- $203,000
- $148,000
- $228,000
