Primary Inc. owns 80 percent outstanding stock of Secondary, Inc. For the current year, Primary reports income (exclusive of any investment income) of $500,000. Primary has 100,000 shares of common stock outstanding. Secondary reports net income of $250,000 for the period with 50,0000 shares of common stock outstanding. Secondary also has 10,000 stock warrants outstanding that allow the holder to acquire the shares at $10 per share. The value of this stock was $20 per share throughout the year. Primary owns 4,000 of these warrants. Calculate Primary’s diluted earnings per share on consolidated financial statements.
Primary Inc. owns 80 percent outstanding stock of Secondary, Inc. For the current year, Primary reports income (exclusive of any investment income) of $500,000. Primary has 100,000 shares of common stock outstanding. Secondary reports net income of $250,000 for the period with 50,0000 shares of common stock outstanding. Secondary also has 10,000 stock warrants outstanding that allow the holder to acquire the shares at $10 per share. The value of this stock was $20 per share throughout the year. Primary owns 4,000 of these warrants. Calculate Primary’s diluted earnings per share on consolidated financial statements.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Primary Inc. owns 80 percent outstanding stock of Secondary, Inc. For the current year, Primary reports income (exclusive of any investment income) of $500,000. Primary has 100,000 shares of common stock outstanding. Secondary reports net income of $250,000 for the period with 50,0000 shares of common stock outstanding. Secondary also has 10,000 stock warrants outstanding that allow the holder to acquire the shares at $10 per share. The value of this stock was $20 per share throughout the year. Primary owns 4,000 of these warrants.
Calculate Primary’s diluted earnings per share on consolidated financial statements.
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