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Computing consolidated earnings per share (EPS) Assume the following facts about a parent and its 75% owned subsidiary company: Net income $200,000 Common shares outstanding 50,000 Convertible preferred stock Dividends = $19,300 Convertible into 9,000 shares of common stock Convertible bonds a. Compute basic earnings per share $ 4.32 Parent b. Compute diluted earnings per share $3.9 x Subsidiary $47,000 26,000 (19,500 = 75% owned by parent) Interest expense after tax = $5,800Convertible into 7,000 shares of common stock

Computing consolidated earnings per share (EPS) Assume the following facts about a parent and its 75% owned subsidiary company: Net income $200,000 Common shares outstanding 50,000 Convertible preferred stock Dividends = $19,300 Convertible into 9,000 shares of common stock Convertible bonds a. Compute basic earnings per share $ 4.32 Parent b. Compute diluted earnings per share $3.9 x Subsidiary $47,000 26,000 (19,500 = 75% owned by parent) Interest expense after tax = $5,800Convertible into 7,000 shares of common stock

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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Computing consolidated earnings per share (EPS) Assume the following facts about a parent and its 75% owned subsidiary company: Net income $200,000 50,000 Common shares outstanding Convertible preferred stock Dividends = $19,300 Convertible into 9,000 shares of common stock Convertible bonds a. Compute basic earnings per share $ 4.32 b. Compute diluted earnings per share $ 3.9 Parent X Subsidiary $47,000 26,000 (19,500 = 75% owned by parent) Interest expense after tax = $5,800Convertible into 7,000 shares of common stock
Transcribed Image Text:Computing consolidated earnings per share (EPS) Assume the following facts about a parent and its 75% owned subsidiary company: Net income $200,000 50,000 Common shares outstanding Convertible preferred stock Dividends = $19,300 Convertible into 9,000 shares of common stock Convertible bonds a. Compute basic earnings per share $ 4.32 b. Compute diluted earnings per share $ 3.9 Parent X Subsidiary $47,000 26,000 (19,500 = 75% owned by parent) Interest expense after tax = $5,800Convertible into 7,000 shares of common stock
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