Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory
ID: 2425575 • Letter: G
Question
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.
Compute the non-controlling interest in Gargiulo's net income for 2012. Show your work.
A.
$9,400.
B.
$9,375.
C.
$9,425.
D.
$9,325.
E.
$8,485.
A.
$9,400.
2010 2011 $8,000$12,000 $15,000 1,2004,000 3,000 2012 Purchases by Posito Ending inventory on Posito's booksExplanation / Answer
Ending inventory on posito's book = 3000
sale on profit = 25% on S.p.
elimination of profit in posto books
profit = 3000*25/100 = 750
gargiulo net income (2012) = 94000
Less- elimination of profit on intra transactions = 94000 - 750 = 93250
non controlling interest = 93250 * 10%
= $ 9325
ANSWER = D ) $9325
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