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Required: Determine Amarillo's basic and diluted EPS.

Required: Determine Amarillo's basic and diluted EPS.

FINANCIAL ACCOUNTING
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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Following are separate income statements for Amarillo, Incorporated, and its 80 percent-owned subsidiary, Saltillo Corporation as well as a consolidated statement for the business combination as a whole (credit balances indicated by parentheses). Accounts Revenues Cost of goods sold Operating expenses Equity in earnings of Saltillo Individual company net income Consolidated net income Noncontrolling interest in consolidated net income Consolidated net income attributable to Amarillo Amarillo Saltillo $ (716,000) $ (516,000) 416,000 284,000 86,000 116,000 (96, 800) $ (280,800) $ (146,000) Answer is complete but not entirely correct. Earnings Per Share 4.38 3.86 Consolidated $ (1,232,000) Additional Information Annual excess fair over book value amortization of $25,000 resulted from the acquisition. • The parent applies the equity method to this investment. • Amarillo has 55,000 shares of common stock and 5,000 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 four shares of common stock. Basic Diluted 700,000 227,000 • Saltillo has 45,000 shares of common stock outstanding. • Saltillo has convertible bonds outstanding, none of which Amarillo owned. During the current year, total interest expense (net of taxes) was $30,000. These bonds can be exchanged for 13,000 shares of the subsidiary's common stock. $ $ $ (305,000) (24, 200) $ (280,800) Required: Determine Amarillo's basic and diluted EPS. Note: Round your intermediate percentage value to 1 decimal place. Round your final answers to 2 decimal places.
Transcribed Image Text:Following are separate income statements for Amarillo, Incorporated, and its 80 percent-owned subsidiary, Saltillo Corporation as well as a consolidated statement for the business combination as a whole (credit balances indicated by parentheses). Accounts Revenues Cost of goods sold Operating expenses Equity in earnings of Saltillo Individual company net income Consolidated net income Noncontrolling interest in consolidated net income Consolidated net income attributable to Amarillo Amarillo Saltillo $ (716,000) $ (516,000) 416,000 284,000 86,000 116,000 (96, 800) $ (280,800) $ (146,000) Answer is complete but not entirely correct. Earnings Per Share 4.38 3.86 Consolidated $ (1,232,000) Additional Information Annual excess fair over book value amortization of $25,000 resulted from the acquisition. • The parent applies the equity method to this investment. • Amarillo has 55,000 shares of common stock and 5,000 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 four shares of common stock. Basic Diluted 700,000 227,000 • Saltillo has 45,000 shares of common stock outstanding. • Saltillo has convertible bonds outstanding, none of which Amarillo owned. During the current year, total interest expense (net of taxes) was $30,000. These bonds can be exchanged for 13,000 shares of the subsidiary's common stock. $ $ $ (305,000) (24, 200) $ (280,800) Required: Determine Amarillo's basic and diluted EPS. Note: Round your intermediate percentage value to 1 decimal place. Round your final answers to 2 decimal places.
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