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

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