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

question 100

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. $$\begin{array} { l c r r } & \mathbf { 2 0 1 0 } & \mathbf { 2 0 1 1 } & \mathbf { 2 0 1 2 } \\\text { Purchases by Posito } & \$ 8,000 & \$ 12,000 & \$ 15,000 \\\text { Ending inventory on Posito's books } & 1,200 & 4,000 & 3,000\end{array}$$ Assume the equity method is used. The following data are available pertaining to Gargiulo's income and dividends. $\begin{array}{lrrr}&2010&2011&2012\\\text { Gargiulo's net income } & \$ 70,000 & \$ 85,000 & \$ 94,000 \\\text { Dividends paid by Gargiulo } & 10,000 & 10,000 & 15,000\end{array}$
-Compute the equity in earnings of Gargiulo reported on Posito's books for 2012.

• A) $84,600.
• B) $84,375.
• C) $83,925.
• D) $84,825.
• E) $84,850.

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Definitions:

Service Quality

The degree to which a delivered service meets the expectations of the customer, often assessed through dimensions like reliability, assurance, tangibles, empathy, and responsiveness.

Empathy

The ability to understand and share the feelings of another person.

Service Quality

The assessment of how well a service meets or exceeds customer expectations, often related to factors like responsiveness, assurance, and empathy.

Tangibility

The physical existence of a product, making it possible to touch, see, and directly experience it.