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 (credit balances indicated by parentheses). Revenues Cost of goods sold Operating expenses Equity in earnings of Rio Grande Individual company net income Consolidated net income Noncontrolling interest in consolidated net income Consolidated net income attributable to Austin Additional Information Austin $ (732,000) 432,000 132,000 (109,600) $ (277,600) $ (162,000) Basic Diluted Rio Grande $ (532,000) 268,000 102,000 Earnings Per Share Consolidated $ (1,264,000) $ 700,000 259,000 (305,000) (27,400) $ (277,600) • 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 63,000 shares of common stock and 9,000 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 five shares of common stock. • Rio Grande has 46,000 shares of common stock outstanding. The company also has 15,000 stock warrants outstanding. For $20, 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 $25 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 $38,000. These bonds can be exchanged for 30,000 shares of the subsidiary's common stock. Determine Austin's basic and diluted EPS. (Round your intermediate percentage value to 1 decimal place. Round your final answers to 2 decimal places.)
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 (credit balances indicated by parentheses). Revenues Cost of goods sold Operating expenses Equity in earnings of Rio Grande Individual company net income Consolidated net income Noncontrolling interest in consolidated net income Consolidated net income attributable to Austin Additional Information Austin $ (732,000) 432,000 132,000 (109,600) $ (277,600) $ (162,000) Basic Diluted Rio Grande $ (532,000) 268,000 102,000 Earnings Per Share Consolidated $ (1,264,000) $ 700,000 259,000 (305,000) (27,400) $ (277,600) • 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 63,000 shares of common stock and 9,000 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 five shares of common stock. • Rio Grande has 46,000 shares of common stock outstanding. The company also has 15,000 stock warrants outstanding. For $20, 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 $25 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 $38,000. These bonds can be exchanged for 30,000 shares of the subsidiary's common stock. Determine Austin's basic and diluted EPS. (Round your intermediate percentage value to 1 decimal place. Round your final answers to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 (credit balances indicated by parentheses).
Revenues
Cost of goods sold
Operating expenses
Equity in earnings of Rio Grande
Individual company net income
Consolidated net income
Noncontrolling interest in consolidated net income
Consolidated net income attributable to Austin
Additional Information
Austin
$ (732,000)
432,000
132,000
(109,600)
$ (277,600)
Basic
Diluted
Rio Grande
$ (532,000)
268,000
102,000
$ (162,000)
Earnings Per
Share
Consolidated
$ (1,264,000)
700,000
259,000
$ (305,000)
(27,400)
(277,600)
• 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 63,000 shares of common stock and 9,000 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 five shares of common stock.
Rio Grande has 46,000 shares of common stock outstanding. The company also has 15,000 stock warrants outstanding. For $20,
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 $25 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 $38,000. These bonds can be exchanged for 30,000 shares of the subsidiary's common stock.
$
Determine Austin's basic and diluted EPS. (Round your intermediate percentage value to 1 decimal place. Round your final answers
to 2 decimal places.)
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