The following separate income statements are for Burks Company and its 80 percent-owned subsidiary, Foreman Company: Foreman $ (340,000) 245,000 (35,000) Revenues Expenses Gain on sale of equipment Equity earnings of subsidiary Net income Outstanding common shares Additional Information • Amortization expense resulting from Foreman's excess acquisition-date fair value is $45,000 per year. • Burks has convertible preferred stock outstanding. Each of these 11,000 shares is paid a dividend of $3 per year. Each share can be converted into three shares of common stock. Burks $ (440,000) 314,000 0 (69,000) $ (195,000) 70,000 • Stock warrants to buy 20,000 shares of Foreman are also outstanding. For $15, each warrant can be converted into a share of Foreman's common stock. The fair value of this stock is $20 throughout the year. Burks owns none of these warrants. $ (130,000) 40,000 • Foreman has convertible bonds payable that paid interest of $50,000 (after taxes) during the year. These bonds can be exchanged for 10,000 shares of common stock. Burks holds 10 percent of these bonds, which it bought at book value directly from Foreman. Basic Diluted Compute basic and diluted EPS for Burks Company. (Round your intermediate percentage value and final answer to 2 decimal places.) Earnings Per Share $ 2.30
The following separate income statements are for Burks Company and its 80 percent-owned subsidiary, Foreman Company: Foreman $ (340,000) 245,000 (35,000) Revenues Expenses Gain on sale of equipment Equity earnings of subsidiary Net income Outstanding common shares Additional Information • Amortization expense resulting from Foreman's excess acquisition-date fair value is $45,000 per year. • Burks has convertible preferred stock outstanding. Each of these 11,000 shares is paid a dividend of $3 per year. Each share can be converted into three shares of common stock. Burks $ (440,000) 314,000 0 (69,000) $ (195,000) 70,000 • Stock warrants to buy 20,000 shares of Foreman are also outstanding. For $15, each warrant can be converted into a share of Foreman's common stock. The fair value of this stock is $20 throughout the year. Burks owns none of these warrants. $ (130,000) 40,000 • Foreman has convertible bonds payable that paid interest of $50,000 (after taxes) during the year. These bonds can be exchanged for 10,000 shares of common stock. Burks holds 10 percent of these bonds, which it bought at book value directly from Foreman. Basic Diluted Compute basic and diluted EPS for Burks Company. (Round your intermediate percentage value and final answer to 2 decimal places.) Earnings Per Share $ 2.30
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following separate income statements are for Burks Company and its 80 percent-owned subsidiary, Foreman Company:
Foreman
$ (340,000)
245,000
(35,000)
Revenues
Expenses
Gain on sale of equipment
Equity earnings of subsidiary
Net income
Outstanding common shares
Additional Information
• Amortization expense resulting from Foreman's excess acquisition-date fair value is $45,000 per year.
• Burks has convertible preferred stock outstanding. Each of these 11,000 shares is paid a dividend of $3 per year. Each share can be
converted into three shares of common stock.
Burks
$ (440,000)
314,000
0
(69,000)
$ (195,000)
70,000
• Stock warrants to buy 20,000 shares of Foreman are also outstanding. For $15, each warrant can be converted into a share of
Foreman's common stock. The fair value of this stock is $20 throughout the year. Burks owns none of these warrants.
$ (130,000)
40,000
• Foreman has convertible bonds payable that paid interest of $50,000 (after taxes) during the year. These bonds can be exchanged
for 10,000 shares of common stock. Burks holds 10 percent of these bonds, which it bought at book value directly from Foreman.
Basic
Diluted
Compute basic and diluted EPS for Burks Company. (Round your intermediate percentage value and final answer to 2 decimal
places.)
Earnings Per Share
$
2.30
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