Gargiulo Company, a 90% Owned Subsidiary of Posito Corporation, Sells

question 59

Multiple Choice

Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory to Posito at a 25% profit on selling price. The following data are available pertaining to intra-entity purchases. Gargiulo was acquired on January 1, 2010.

Assume the equity method is used. The following data are available pertaining to Gargiulo's income and dividends.

For consolidation purposes, what amount would be debited to cost of goods sold for the 2012 consolidation worksheet with regard to the unrealized gross profit of the 2012 intra-entity transfer of merchandise?

• A) $600.
• B) $750.
• C) $3,760.
• D) $3,000.
• E) $675.

---

Definitions:

Skills

Abilities or expertise acquired through practice and learning, which can be applied to perform tasks effectively.

Settlement

The resolution or agreement reached in a dispute, negotiation, or transaction, often involving the exchange of resources or terms.

Routine Message

A standard or regular form of communication that follows a set pattern or format, often used in business or professional settings.

Claim

A formal complaint made in response to dissatisfaction over a product or service.