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

question 25

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 January 1 retained earnings for the 2010 consolidation worksheet entry with regard to the unrealized gross profit of the 2010 intra-entity transfer of merchandise?

• A) $0.
• B) $1,600.
• C) $300.
• D) $240.
• E) $270.

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Definitions:

Indifference Curves

Graphs representing combinations of goods among which a consumer is indifferent, showing trade-offs in consumption preferences.

Marginal Utility

The extra pleasure or advantage obtained from using an additional unit of a product or service.

Total Utility

The total satisfaction received from consuming a given total quantity of a good or service.

Clothing

Clothing refers to items worn on the body, typically made from fabrics or textiles, but can include garments made from animal skin or other thin sheets of materials put together, serving to protect, adorn, or fulfill social and cultural expressions.