A$8,570. (B)$7,580.(C) $8,400.(D) $8,500.(E) $8,430. Gargiulo Company, ? 90% own

Question

A$8,570. (B)$7,580.(C) $8,400.(D) $8,500.(E) $8,430.

Gargiulo Company, ? 90% owned subsidiary o was acquired on January 1, 2012 Posito Corporation, sells inventory to Posito at 25% profit on selling price. The following data are available pertaining to intra-entity purchases. Gargiulo 2012 2014 2013 $8,000 $12,000 $15,000 Purchases by Posito Ending inventory on Posito's books Assume the equity method is used. The following data are available pertaining to Gargiulo's income and dividends. 1,200 4,000 3,000 2012 2014 Gargiulo's net income Dividends paid by Gargiulo 2013 $70,000 $85,000 $94,000 10,00010,000 15,000 Compute the non-controlling interest in Gargiulo's net income for 2013. $8,570 O $7.580 O $8,400 O $8,500 O $8,430

Explanation / Answer

Answer:

E. $8430

Explanation:

Calculation of non-controlling interest in Gargiulo's net income for 2013.

Parent's Part of Net Income 2013

= ($85,000 × .10)                                                                                                                $8,500

- Earnings Adjustment for Unrealized Gains of Subsidiary   2013

= ($4,000 × .25 × .10)                                                                                                        ($100)

+ (Realized Gains of Subsidiary for 2013)                                                                         $30

                                                                                                                                          = $8430

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