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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text: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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