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Homework answers / question archive / Required information On January 1, 2016, Phoenix Co

Required information On January 1, 2016, Phoenix Co

Accounting

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

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