Assume the following facts about a parent and its 75% owned subsidiary company: Parent Net income $200,000 50,000 Common shares outstanding Convertible preferred stock Dividends $19,300 Convertible into 9,000 shares of common stock Convertible bonds Subsidiary $47,000 26,000 (19,500 = 75% owned by parent) Interest expense after tax = $5,800Convertible into 7,000 shares of common stock
Assume the following facts about a parent and its 75% owned subsidiary company: Parent Net income $200,000 50,000 Common shares outstanding Convertible preferred stock Dividends $19,300 Convertible into 9,000 shares of common stock Convertible bonds Subsidiary $47,000 26,000 (19,500 = 75% owned by parent) Interest expense after tax = $5,800Convertible into 7,000 shares of common stock
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Computing consolidated earnings per share (EPS)
Assume the following facts about a parent and its 75% owned subsidiary company:
Parent
Net income
$200,000
50,000
Common shares outstanding
Convertible preferred stock
Convertible bonds
Dividends = $19,300 Convertible into 9,000 shares of common stock
a. Compute basic earnings per share
$ 3.93
X
b. Compute diluted earnings per share
$ 4.28
X
Subsidiary
$47,000
26,000 (19,500 = 75% owned by parent)
Interest expense after tax = $5,800Convertible into 7,000 shares of common stock](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F09f9054d-685d-4cbb-b602-9380427368e0%2F5206cd9e-b0c9-4ddf-ade0-116927dcb399%2Fdyab9q_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Computing consolidated earnings per share (EPS)
Assume the following facts about a parent and its 75% owned subsidiary company:
Parent
Net income
$200,000
50,000
Common shares outstanding
Convertible preferred stock
Convertible bonds
Dividends = $19,300 Convertible into 9,000 shares of common stock
a. Compute basic earnings per share
$ 3.93
X
b. Compute diluted earnings per share
$ 4.28
X
Subsidiary
$47,000
26,000 (19,500 = 75% owned by parent)
Interest expense after tax = $5,800Convertible into 7,000 shares of common stock
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