[EPS] COMPUTING EPS WITH CONVERTIBLE DEBENTURES Pam Corporation has $ 108,000 income from its own operations for 2016. And $42,000 income from Sun Corporation, its 70 percent-owned subsidiary. Sun's net income of $60,000 consists of $66,000 operating income less $ 6,000 net-of tax interest on its outstanding 10 percent convertible debentures. Throughout 2016, Pam has 100,000 shares of common stock outstanding, and Sun has 50,000 outstanding common shares. REQUIRED: 1.Compute Pam's diluted earnings per share for 2016, assuming that Sun's bonds are convertible into 10,000 shares of Sun's common stock. 2.Compute Pam's diluted earnings per share for 2016, assuming that Sun's bonds are convertible into 10,000 shares of Pam's common stock.
[EPS] COMPUTING EPS WITH CONVERTIBLE DEBENTURES Pam Corporation has $ 108,000 income from its own operations for 2016. And $42,000 income from Sun Corporation, its 70 percent-owned subsidiary. Sun's net income of $60,000 consists of $66,000 operating income less $ 6,000 net-of tax interest on its outstanding 10 percent convertible debentures. Throughout 2016, Pam has 100,000 shares of common stock outstanding, and Sun has 50,000 outstanding common shares. REQUIRED: 1.Compute Pam's diluted earnings per share for 2016, assuming that Sun's bonds are convertible into 10,000 shares of Sun's common stock. 2.Compute Pam's diluted earnings per share for 2016, assuming that Sun's bonds are convertible into 10,000 shares of Pam's common stock.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![[EPS] COMPUTING EPS WITH
CONVERTIBLE DEBENTURES
Pam Corporation has $ 108,000
income from its own operations for
2016. And $42,000 income from Sun
Corporation, its 70 percent-owned
subsidiary. Sun's net income of
$60,000 consists of $66,000
operating income less $ 6,000 net-of
tax interest on its outstanding 10
percent convertible debentures.
Throughout 2016, Pam has 100,000
shares of common stock outstanding,
and Sun has 50,000 outstanding
common shares.
REQUIRED:
1.Compute Pam's diluted earnings per
share for 2016, assuming that Sun's
bonds are convertible into 10,000
shares of Sun's common stock.
2.Compute Pam's diluted earnings per
share for 2016, assuming that Sun's
bonds are convertible into 10,000
shares of Pam's common stock.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7d1b6bc7-22be-4d7a-9314-f8909e710633%2F3b166fa9-8eea-47b7-b1b7-52f2ddc4514c%2Fm5m3qd9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:[EPS] COMPUTING EPS WITH
CONVERTIBLE DEBENTURES
Pam Corporation has $ 108,000
income from its own operations for
2016. And $42,000 income from Sun
Corporation, its 70 percent-owned
subsidiary. Sun's net income of
$60,000 consists of $66,000
operating income less $ 6,000 net-of
tax interest on its outstanding 10
percent convertible debentures.
Throughout 2016, Pam has 100,000
shares of common stock outstanding,
and Sun has 50,000 outstanding
common shares.
REQUIRED:
1.Compute Pam's diluted earnings per
share for 2016, assuming that Sun's
bonds are convertible into 10,000
shares of Sun's common stock.
2.Compute Pam's diluted earnings per
share for 2016, assuming that Sun's
bonds are convertible into 10,000
shares of Pam's common stock.
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