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

question 44

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 2010.

• A) $63,000.
• B) $62,730.
• C) $63,270.
• D) $70,000.
• E) $62,700.

---

Definitions:

Histogram

A graphical representation of the distribution of numerical data, where the data is grouped into bins and the frequency of data points within each bin is depicted by the height of the bar.

Intervals

Ranges or spans between two values, often used in contexts of measurement, time, or statistical analysis.

Overlap

The extent to which two or more things cover the same area or share common elements.

Frequency Distribution

A statistical analysis that shows how often each different value in a set of data occurs.