ACCT.PRINCIPLES-WILEYPLUS NEXTGEN
14th Edition
ISBN: 9781119709954
Author: Weygandt
Publisher: WILEY
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Chapter 14, Problem 15Q
To determine
Earnings Per Share (EPS): The part of profit earned by each share of the company is called as earning per share. It reveals the profitability of the company. To calculate earnings per share net income is divided by average number of outstanding shares.
To determine: The reason for subtracting preferred stock dividends from net income in computing earnings per share.
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Several years ago, a parent company acquired all of the outstanding common stock of its subsidiary for a purchase price of $320,000. On the acquisition date, this purchase price was $75,000 more than the subsidiary's book value of Stockholders' Equity. The AAP was entirely attributable to Goodwill. On the date of acquisition, the parent company's management believed that the goodwill had a 10-year useful life. Since the date of acquisition, the subsidiary has reported a cumulative net income of $260,000 and paid $105,000 in dividends to its parent company. Compute the balance of the Equity Investment account on the parent's balance sheet, assuming that the Goodwill asset has not declined in value since the date of acquisition.
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Earnings per share (EPS), basic and diluted; Author: Bionic Turtle;https://www.youtube.com/watch?v=i2IJTpvZmH4;License: Standard Youtube License