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

question 114

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 noncontrolling interest in Gargiulo's net income for 2010.

• A) $6,970.
• B) $7,000.
• C) $7,030.
• D) $6,270.
• E) $6,230.

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Definitions:

Uterine Tube

A pair of tubes leading from the ovaries of female mammals into the uterus, through which the egg travels during ovulation.

Scarring

The process through which wounds heal, leaving permanent fibrotic changes in the tissue.

Surgical Procedure

A medical intervention involving an incision with instruments, performed to repair damage, remove diseased tissue, or improve function.

Fertilization

The process by which a sperm cell unites with an egg cell, resulting in the formation of a zygote that can develop into a new organism.