A) What is consolidated net income for Phoenix and Sedona for 2021?

B) On its December 31, 2021, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list?

Transcribed Image Text:

On January 1, 2019, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $740,000 cash. At January 1, 2019, Sedona's net assets had a total carrying amount of $518,000. Equipment (eight-year remaining life) was undervalued on Sedona's financial records by $106,000. 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 $22,000 dividend. Sedona recorded net income of $83,000 in 2019 and $97,100 in 2020. Selected account balances from the two companies' individual records were as follows: 2021 Revenues 2021 Expenses 2021 Income from Sedona Retained earnings 12/31/21 Phoenix $ 527,000 353,000 53,550 282,550 Sedona $ 334,800 239,000 201,700 On January 1, 2019, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $740,000 cash. At January 1, 2019, Sedona's net assets had a total carrying amount of $518,000. Equipment (eight-year remaining life) was undervalued on Sedona's financial records by $106,000. 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 $22,000 dividend. Sedona recorded net income of $83,000 in 2019 and $97,100 in 2020. Selected account balances from the two companies' individual records were as follows: 2021 Revenues 2021 Expenses 2021 Income from Sedona Retained earnings 12/31/21 Phoenix $ 527,000 353,000 53,550 282,550 Sedona $ 334,800 239,000 201,700