Problem:
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. Gargiulowas acquired on January 1, 2010.
2010 2011 2012
Purchases by Posito $8,000 $12,000 $15,000
Ending inventory on Posito's books 1,200 4,000 3,000
Assume the equity method is used. The following data are available pertaining to Gargiulo's income and dividends.
2010 2011 2012
Gragiulo's net income $70,000 $85,000 $94,000
Dividends paid by Gragiulo 10,000 10,000 15,000
Compute the non-controlling interest in Gargiulo's net income for 2012.