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klasskru [66]
3 years ago
5

On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $784,000 cash. At Janua

ry 1, 2016, Sedona’s net assets had a total carrying amount of $548,800. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $95,000. 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 $34,000 dividend. Sedona recorded net income of $113,000 in 2016 and $124,100 in 2017.
Selected account balances from the two companies’ individual records were as follows:

Phoenix Sedona
2018 Revenues $ 648,000 $ 335,000
2018 Expenses 412,000 234,000
2018 Income from Sedona 54,075
Retained earnings 12/31/18 347,075 236,500
What is consolidated net income for Phoenix and Sedona for 2018?

What is Phoenix’s consolidated retained earnings balance at December 31, 2018?

On its December 31, 2018, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list?
Business
1 answer:
stiv31 [10]3 years ago
4 0

Answer:

a) Consolidated net income for Phoenix and Sedona for 2018

Phoenix revenues                      $648,000

-Phoenix expenses                    ($412,000)

Phoenix Net Income                  $236,000

2018 Income from Sedona        <u>$54,075</u>

Consolidated net income for   $290,075

Phoenix and Sedona for 2018  

b) Phoenix’s consolidated retained earnings balance at December 31, 2018

Phoenix’s consolidated retained earnings balance at December 31, 2018  = $347,075.00  (same as Phoenix because of equity method use)  

c) What amount should Phoenix report for Sedona’s customer list?

Consideration transferred at fair value      $784,000

Book value acquired                                   <u>($548,800)</u>

Excess fair over book value                        $235,200

To Equipment                                               <u>$95,000   </u>

To customer list (4 year life)                        <u> $140,200 </u>

Three years since acquisition of customer list = $140,200/4 years = $35,050. Hence, Phoenix report $35,050 as Sedona’s customer list.

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Answer:

2,400 Yens

Explanation:

exchange rate for buying Japanese Yen is 12 Yens per Dollar

1 dollar : 12 Yens

how many Yens do you need to buy 200 Dollars for?

Let

x = number of Yens needed

200 dollars : x Yens

Equate the ratios to find x

1 dollar : 12 Yens = 200 dollars : x Yens

1/12 = 200/x

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7 0
2 years ago
Identify the internal control weakness in the following situations. State how the person can hurt the company.
Degger [83]

Answer:

Identification of the Internal Control Weaknesses:

A.  There is no segregation of duties and there is lack of access control.  Jerry Miller as a security guard is not expected to have a master key to the cash box.  With this he can pilfer the cash.  If he prepares the report that shows the number of cars that parked on the lot, he is not supposed to also prepare the day's cash receipts.  Otherwise, he can state any number of cars as parked that he likes, and which corresponds to the cash he might leave in the Cash box since he also has a master key.

B.  There is no segregation of duties and there is lack of supervision,  proper reconciliations, and assets audit.  Sharon Fisher handles purchase transactions from the beginning to the close all alone with a third party.  This exposes the company to procurement frauds and collusion with suppliers.  She can purchase assets for the company at prices that would enrich her personally.

C. Forming an audit opinion on the basis of ratio analysis of last year's comparative financial statements exposes the company to audit risks.  While ratio analysis is part of the basis for forming audit opinions, it is surely not the first audit procedure to obtain audit evidence to support his audit opinion on the financial statements.  An auditor is expected to obtain sufficient audit evidence and perform audit substantive tests of financial statement assertions.  He or she is also expected to review the internal control system to ensure that it is operating effectively after establishing its existence and reviewing changes in internal controls.

Explanation:

Internal Controls are controls established by management in order to help it achieve business goals.  There are many internal controls, including Separation of Duties, Access Controls , Authorization and Approvals, Asset Audits, Reconciliations, and Data Backups.  The purposes of internal controls are to establish the reliability of financial reporting, ensure timely feedback on the achievement of operational or strategic goals, and achieve compliance with financial management laws, and accounting regulations.

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3 years ago
The supply of aged cheddar cheese is inelastic, and the supply of flour is elastic. Both goods are considered to be normal goods
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4 0
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Consider the Northern California territory of Nova generates a sales revenue of $320,000 with four salespeople. The territory ac
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Answer: e)5% and $80,000

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$320,000 was generated by the salespeople in this territory.

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8 0
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_____ refers to training employees on overseas work assignments to work through national and cultural boundaries. validation adv
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