On January 1, 2013, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $862,900 cash. At January 1, 2013, Sedona’s net assets had a total carrying amount of $622,500. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $107,200. 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 2013 and $80,000 in 2014.

Selected account balances from the two companies’ individual records were as follows:

 

On its December 31, 2015, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list?

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Phoenix Sedona 2015 Revenues $498,000 $285,000 2015 Expenses 350,000 195,000 2015 Income from 55,000 Sedona Retained earnings 250,000 175,000 12/31/15 Phoenix Sedona 2015 Revenues $498,000 $285,000 2015 Expenses 350,000 195,000 2015 Income from 55,000 Sedona Retained earnings 250,000 175,000 12/31/15

Answer rating: 100% (QA)

Company P acquired 100 percent of the outstanding voting shares of Company S on Janua... View the full answer