On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $662,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying amount of $463,400. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $96,000. 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 $20,500 dividend. Sedona recorded net income of $99,500 in 2016 and $110,300 in 2017. Selected account balances from the two companies’ individual records were as follows: Phoenix Sedona 2018 Revenues $ 544,000 $ 381,000 2018 Expenses 387,000 280,000 2018 Income from Sedona 63,350 Retained earnings 12/31/18 270,350 224,500 On its December 31, 2018, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list?
On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $662,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying amount of $463,400. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $96,000. 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 $20,500 dividend. Sedona recorded net income of $99,500 in 2016 and $110,300 in 2017.
Selected account balances from the two companies’ individual records were as follows:
| Phoenix | Sedona | |||||
| 2018 Revenues | $ | 544,000 | $ | 381,000 | ||
| 2018 Expenses | 387,000 | 280,000 | ||||
| 2018 Income from Sedona | 63,350 | |||||
| 270,350 | 224,500 | |||||
On its December 31, 2018, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list?
On its December 31, 2018, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list?
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