Computing consolidated earnings per share (EPS) Assume the following facts about a parent and its 75% owned subsidiary company: Parent 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 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

Computing consolidated earnings per share (EPS) Assume the following facts about a parent and its 75% owned subsidiary company: Parent 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 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

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

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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