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

question 81

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 2011 consolidation worksheet with regard to the unrealized gross profit of the 2011 intra-entity transfer of merchandise?

• A) $1,000.
• B) $800.
• C) $3,000.
• D) $2,400.
• E) $900.

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Definitions:

Will

A legal document by which a person expresses their wishes as to how their property is to be distributed at death, and names one or more persons to manage the estate.

Trust

A fiduciary relationship in which one party holds property or assets for the benefit of another based on an agreement.

Codicil

An addition or amendment made to a will, which may add to, modify, or revoke portions of the document.

Trusts

Are fiduciary relationships in which one party, known as a trustee, holds property for the benefit of another party, the beneficiary.