43. Which of the following statements is true regarding inventory transfers
between a parent and its subsidiary, using the initial value method?
44. Which of the following statements is true regarding an intra-entity sale of
land?
45. Parent sold land to its subsidiary for a gain in 2008. The subsidiary sold the
land externally for a gain in 2011. Which of the following statements is true?
46. An intra-entity sale took place whereby the transfer price exceeded the
book value of a depreciable asset. Which statement is true for the year following
the sale?
47. An intra-entity sale took place whereby the book value exceeded the
transfer price of a depreciable asset. Which statement is true for the year
following the sale?
48. An intra-entity sale took place whereby the transfer price was less than the
book value of a depreciable asset. Which statement is true for the year following
the sale?
49. Which of the following statements is true concerning an intra-entity
transfer of a depreciable asset?
50. 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 equity in earnings of Gargiulo reported on Posito’s books for 2010.
51. 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 equity in earnings of Gargiulo reported on Posito’s books for 2011.
52. 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 equity in earnings of Gargiulo reported on Posito’s books for 2012.
53. 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 2010.
54. 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 2011.
55. 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.
56. 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.
For consolidation purposes, what amount would be debited to cost of goods sold
for the 2010 consolidation worksheet with regard to unrealized gross profit of the
intra-entity transfer of merchandise?
57. 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.
For consolidation purposes, what amount would be debited to cost of goods sold
for the 2011 consolidation worksheet with regard to the unrealized gross profit of
the 2011 intra-entity transfer of merchandise?
58. 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.
For consolidation purposes, what amount would be debited to cost of goods sold
for the 2012 consolidation worksheet with regard to the unrealized gross profit of
the 2012 intra-entity transfer of merchandise?
59. 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.
For consolidation purposes, what amount would be debited to January 1 retained
earnings for the 2010 consolidation worksheet entry with regard to the unrealized
gross profit of the 2010 intra-entity transfer of merchandise?
60. 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.
For consolidation purposes, what amount would be debited to January 1 retained
earnings for the 2011 consolidation worksheet entry with regard to the unrealized
gross profit of the 2010 intra-entity transfer of merchandise?
61. 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.
For consolidation purposes, what amount would be debited to January 1 retained
earnings for the 2012 consolidation worksheet entry with regard to the unrealized
gross profit of the 2011 intra-entity transfer of merchandise?
62. Patti Company owns 80% of the common stock of Shannon, Inc. In the
current year, Patti reports sales of $10,000,000 and cost of goods sold of
$7,500,000. For the same period, Shannon has sales of $200,000 and cost of
goods sold of $160,000. During the year, Patti sold merchandise to Shannon for
$60,000 at a price based on the normal markup. At the end of the year, Shannon
still possesses 30 percent of this inventory.
Compute consolidated sales.
63. Patti Company owns 80% of the common stock of Shannon, Inc. In the
current year, Patti reports sales of $10,000,000 and cost of goods sold of
$7,500,000. For the same period, Shannon has sales of $200,000 and cost of
goods sold of $160,000. During the year, Patti sold merchandise to Shannon for
$60,000 at a price based on the normal markup. At the end of the year, Shannon
still possesses 30 percent of this inventory.
Compute consolidated cost of goods sold.