On January 1, 2019, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $668,000 cash. At January 1, 2019, Sedona’s net assets had a total carrying amount of $467,600. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $90,400. 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 $17,500 dividend. Sedona recorded net income of $93,500 in 2019 and $110,600 in 2020. Selected account balances from the two companies’ individual records were as follows: Phoenix Sedona 2021 Revenues $ 578,000 $ 362,000 2021 Expenses 375,000 270,000 2021 Income from Sedona 53,200 Retained earnings 12/31/21 317,200 215,600 On its December 31, 2021, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list? Multiple Choice $22,000 $11,000 $55,000 $27,500
On January 1, 2019, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $668,000 cash. At January 1, 2019, Sedona’s net assets had a total carrying amount of $467,600. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $90,400. 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 $17,500 dividend. Sedona recorded net income of $93,500 in 2019 and $110,600 in 2020.
Selected account balances from the two companies’ individual records were as follows:
| Phoenix | Sedona | |||||
| 2021 Revenues | $ | 578,000 | $ | 362,000 | ||
| 2021 Expenses | 375,000 | 270,000 | ||||
| 2021 Income from Sedona | 53,200 | |||||
| 317,200 | 215,600 | |||||
On its December 31, 2021, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list?
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$22,000
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$11,000
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$55,000
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$27,500
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