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1. 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 intraentity 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. a.) Make the \"G\" entry for 2010. b) Make the \"*G\" entry for 2011. c) Make the \"G\" entry for 2011 d) Compute the equity in earnings of Gargiulo reported on Posito's books for 2010. A. $63,000. B. $62,730. C. $63,270. D. $70,000. E. $62,700. e) Compute the equity in earnings of Gargiulo reported on Posito's books for 2011. A. $76,500. B. $77,130. C. $75,870. D. $75,600. E. $75,800. 2. Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1, 2010, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2010, 2011, and 2012, respectively. Parker sold the land purchased from Stark in 2010 for $92,000 in 2012. a) Which of the following will be included in a consolidation entry for 2011? A. Debit retained earnings for $5,000. B. Credit retained earnings for $5,000. C. Debit investment in subsidiary for $5,000. D. Credit investment in subsidiary for $5,000. E. Credit land for $5,000. 3. Describe how to determine whether an entity qualifies as a Variable Interest Entity. 4. Describe how to identify the Primary Beneficiary of a Variable Interest Entity. 5. On January 1, 2011, John Doe Enterprises (JDE) acquired a 55% interest in Bubba Manufacturing, Inc. (BMI). JDE paid for the transaction with $3 million cash and 500,000 shares of JDE common stock (par value $1.00 per share). At the time of the acquisition, BMI's book value was $16,970,000. On January 1, JDE stock had a market value of $14.90 per share and there was no control premium in this transaction. Any consideration transferred over book value is assigned to goodwill. BMI had the following balances on January 1, 2011. For internal reporting purposes, JDE employed the equity method to account for this investment. The following account balances are for the year ending December 31, 2011 for both companies. Required: Prepare a consolidation worksheet for this business combination. Assume goodwill has been reviewed and there is no goodwill impairment