Computing consolidated earnings per share (EPS)Assume the following facts about a parent and its 75% owned subsidiary company:ParentNet income$200,00050,000Common shares outstandingConvertible preferred stockConvertible bondsDividends = $19,300 Convertible into 9,000 shares of common stocka. Compute basic earnings per share$ 3.93Xb. Compute diluted earnings per share$ 4.28XSubsidiary$47,00026,000 (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

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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

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: Net income $220,000 Common shares outstanding 50,000 Convertible preferred stock Dividends = $21,300 Convertible into 9,000 shares of common stock Convertible bonds a. Compute basic earnings per share $ 4.4 X Parent b. Compute diluted earnings per share $ 4.9 X Subsidiary $50,000 30,000 (22,500 = 75% owned by parent) Interest expense after tax = $5,860Convertible into 8,000 shares of common stock
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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 Common shares outstanding Convertible preferred stock Convertible bonds $180,000 50,000 Dividends = $17,100 Convertible into 9,000 shares of common stock a. Compute basic earnings per share $ b. Compute diluted earnings per share LA Subsidiary $45,000 22,000 (16,500 = 75% owned by parent) Interest expense after tax = $7,200 Convertible into 4,500 shares of common stock
Poison Corporation holds 70 percent of Snake Company's voting common shares but none of its preferred shares. Summary balance sheets for the companies on December 31, 20X1, are as follows: Assets Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Investment in Snake Company Total Assets Liabilities and Owners' Equity Accounts Payable Wages Payable Preferred Stock Common Stock ($10 par value) Retained Earnings Total Liabilities and Owners' Equity Poison Corporation $ 19,000 38,000 120,000 280,000 (131,000) 124,600 $ 450,600 Consolidated earnings per share $ 83,600 42,000 100,000 120,000 105,000 $ 450,600 Required: Compute 20X1 consolidated EPS. Ignore any tax consequences. Note: Round your answer to 2 decimal places. Snake Company $ 27,000 48,000 72,000 210,000 (64,000) $ 293,000 $ 62,000 Neither of the preferred issues is convertible. Poison's preferred pays a 9 percent annual dividend and Snake's preferred pays a 10 percent dividend. Snake…
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