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

question 82

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.

Compute the non-controlling interest in Gargiulo's net income for 2011.

• A) $8,500.
• B) $8,570.
• C) $8,430.
• D) $8,400.
• E) $7,580.

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Definitions:

Variable Costs

Costs that vary directly with the level of business activity.

Variable Costs

Costs that vary in total directly and proportionately with changes in the activity level or volume of output.

Financial Advantage

The benefit or edge that a business or individual has that allows them to generate more income or wealth compared to others.

Fixed Manufacturing Overhead

Regular, consistent expenses that do not vary with production levels, such as salaries of supervisors and rent for factory facilities.