What is consolidated net income for Phoenix and Sedona for 2013?

a. $148,000

b. $203,000

c. $228,000

d. $238,000

On January 1, 2011, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $600,000 cash. At January 1, 2011, 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 paid a $20,000 dividend. Sedona recorded income of $70,000 in 2011 and $80,000 in 2012.

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

______________________________Phoenix ___________Sedona

2013 Revenues ..........................$498,000 ...............$285,000

2013 Expenses ............................350,000 ................ 195,000

2013 Income from Sedona ...............55,000

Retained earnings 12/31/13 ............250,000 .................. 175,000