Austin Rio Grande Consolidated $(700,000) $(500,000) $(1,200,000) 400,000 100,000 (84,000) $(284,000) $(130,000) Revenues.. Cost of goods sold Operating expenses. Equity in earnings of Rio Grande 300,000 70,000 700,000 195,000 Individual company net income Consolidated net income $ (305.000) Noncontrolling interest in consolidated net income... (21,000) Consolidated net income attributable to Austin $ (284,000)
Austin Rio Grande Consolidated $(700,000) $(500,000) $(1,200,000) 400,000 100,000 (84,000) $(284,000) $(130,000) Revenues.. Cost of goods sold Operating expenses. Equity in earnings of Rio Grande 300,000 70,000 700,000 195,000 Individual company net income Consolidated net income $ (305.000) Noncontrolling interest in consolidated net income... (21,000) Consolidated net income attributable to Austin $ (284,000)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Following are separate income statements for Austin, Inc., and its 80 percent–owned subsidiary, Rio Grande Corporation as well as a consolidated statement for the business combination as a whole.
Additional Information
• Annual excess fair over book value amortization of $25,000 resulted from the acquisition.
• The parent applies the equity method to this investment.
• Austin has 50,000 shares of common stock and 10,000 shares of preferred stock outstanding. Owners of the preferred stock are paid an annual dividend of $40,000, and each share can be exchanged for two shares of common stock.
• Rio Grande has 30,000 shares of common stock outstanding. The company also has 5,000 stock warrants outstanding. For $10, each warrant can be converted into a share of Rio Grande’s common stock. Austin holds half of these warrants. The price of Rio Grande’s common stock was $20 per share throughout the year.
• Rio Grande also has convertible bonds, none of which Austin owned. During the current year, total interest expense (net of taxes) was $22,000. These bonds can be exchanged for 10,000 shares of the subsidiary’s common stock.
Determine Austin’s basic and diluted EPS.
Transcribed Image Text:Austin
Rio Grande Consolidated
$(700,000) $(500,000) $(1,200,000)
400,000
100,000
(84,000)
$(284,000) $(130,000)
Revenues..
Cost of goods sold
Operating expenses.
Equity in earnings of Rio Grande
300,000
70,000
700,000
195,000
Individual company net income
Consolidated net income
$ (305.000)
Noncontrolling interest in consolidated
net income...
(21,000)
Consolidated net income attributable
to Austin
$ (284,000)
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