Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2019, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $600,000 cash. At January 1, 2019, Sedona's

image text in transcribedimage text in transcribed

On January 1, 2019, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $600,000 cash. At January 1, 2019, 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 2019 and $80,000 in 2020. Selected account balances from the two companies' individual records were as follows: Phoenix $ 498,000 350,000 55,000 250,000 Sedona $ 285,000 195,000 2021 Revenues 2021 Expenses 2021 Income from Sedona Retained earnings 12/31/21 175,000 What is consolidated net income for Phoenix and Sedona for 2021? Multiple Choice $228,000 $238,000 $148,000 $203,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Financial Management Federal Information System Controls Audit Manual

Authors: U.S. Government Accountability Office

1st Edition

1289168172, 978-1289168179

More Books

Students also viewed these Accounting questions

Question

6. Have you used solid reasoning in your argument?

Answered: 1 week ago