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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 books

Explanation / 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