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

question 84

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 2012.

• A) $9,400.
• B) $9,375.
• C) $9,425.
• D) $9,325.
• E) $8,485.

Understand how behavioral economics explains suboptimal decisions and systematic errors.

Grasp the strategies businesses use to influence consumer behavior and increase sales.

Recognize the contributions of key figures in the field of behavioral economics.

Contrast the prediction capabilities of neoclassical and behavioral economics in real-world economic crises.

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Definitions:

Renovation Expense

Costs associated with updating or improving a property or facility.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an equal amount per period.

Income Tax Expense

The cost incurred by a business or individual due to income tax, reflected as an expense on the income statement.

Capital Budgeting

The process by which a business evaluates and plans for significant investments in projects or long-term assets.