Question :
On 1st January, 2011, Phoenix Co. acquired 100% of the outstanding voting shares of Sedona, Inc. for $600,000 cash. At 1st January, 2011, Sedona's total assets had a net 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 prepared by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity technique to account for its investment in Sedona. Every 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 given:
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
a. Evaluate the consolidated net income for Sodena and Phonenix for 2013.
b. What is Phoenix's merge retained earnings balance at 31st December, 2013?
c. On its 31st December, 2013, consolidated balance sheet, evaluate amount could phonenix report for Sedona customer list?