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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
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
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