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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Computing consolidated earnings per share (EPS) Assume the following facts about a parent and its 75% owned subsidiary company: Net income $210,000 Common shares outstanding 50,000 Convertible preferred stock Dividends $20,100 Convertible into 9,000 shares of common stock Convertible bonds a. Compute basic earnings per share $ Parent b. Compute diluted earnings per share Subsidiary $49,000 28,000 (21,000 = 75% owned by parent) Interest expense after tax = $7,100Convertible Into 6,000 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 $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
Computing consolidated earnings per share (EPS) Assume the following facts about a parent and its 75% owned subsidiary company: Parent Subsidiary Net income $180,000 Common shares outstanding 50,000 Convertible preferred stock Dividends $17,100 Convertible into 9,000 shares of common stock Convertible bonds a. Compute basic earnings per share $ 3.93 b. Compute diluted earnings per share $ 3.68 x $45,000 22,000 (16,500 75% owned by parent) Interest expense after tax $7,200 Convertible into 4,500 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 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
Computing consolidated earnings per share (EPS) Assume the following facts about a parent and its 75% owned subsidiary company. Parent Net income $180,000 Common shares outstanding 50,000 Convertible preferred stock Dividends - $17,100 Convertible bonds Convertible into 9,000 shares of common stock a. Compute basic earnings per share $ 3.93 b. Compute diluted earnings per share $ 3.62 x Subsidiary $45,000 22,000 (16,500-75% owned by pare Interest expere after tax-$7,200 Convertible into 4,500 shares of common stock
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