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The following separate income statements are for Burks Company and its 80 percent-owned subsidiary, Foreman Company: Foreman $(326,000) 238,000 (28,000) 0 Revenues Expenses Gain on sale of equipment Equity earnings of subsidiary Net income Outstanding common shares Additional Information Burks $(426,000) 360,000 • Amortization expense resulting from Foreman's excess acquisition-date fair value is $38,000 per year. • Burks has convertible preferred stock outstanding. Each of these 7,000 shares is paid a dividend of $6 per year. Each share can be converted into six shares of common stock. Answer is complete but not entirely correct. Earnings Per Share S 0 (65,000) $(131,000) 60,000 • Stock warrants to buy 14,000 shares of Foreman are also outstanding. For $10, 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. • Foreman has convertible bonds payable that paid interest of $43,000 (after taxes) during the year. These bonds can be exchanged for 14,000 shares of common stock. Burks holds 20 percent of these bonds, which it bought at book value directly from Foreman. Basic Diluted $(116,000) 35,000 Compute basic and diluted EPS for Burks Company. (Round your intermediate percentage value and final answer to 2 decimal places.) 2.44X 1.75 X

The following separate income statements are for Burks Company and its 80 percent-owned subsidiary, Foreman Company: Foreman $(326,000) 238,000 (28,000) 0 Revenues Expenses Gain on sale of equipment Equity earnings of subsidiary Net income Outstanding common shares Additional Information Burks $(426,000) 360,000 • Amortization expense resulting from Foreman's excess acquisition-date fair value is $38,000 per year. • Burks has convertible preferred stock outstanding. Each of these 7,000 shares is paid a dividend of $6 per year. Each share can be converted into six shares of common stock. Answer is complete but not entirely correct. Earnings Per Share S 0 (65,000) $(131,000) 60,000 • Stock warrants to buy 14,000 shares of Foreman are also outstanding. For $10, 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. • Foreman has convertible bonds payable that paid interest of $43,000 (after taxes) during the year. These bonds can be exchanged for 14,000 shares of common stock. Burks holds 20 percent of these bonds, which it bought at book value directly from Foreman. Basic Diluted $(116,000) 35,000 Compute basic and diluted EPS for Burks Company. (Round your intermediate percentage value and final answer to 2 decimal places.) 2.44X 1.75 X

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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The following separate income statements are for Burks Company and its 80 percent-owned subsidiary, Foreman Company: Foreman $(326,000) 238,000 (28,000) 0 Revenues Expenses Gain on sale of equipment Equity earnings of subsidiary Net income Outstanding common shares Additional Information Burks $(426,000) 360,000 • Amortization expense resulting from Foreman's excess acquisition-date fair value is $38,000 per year. ● Burks has convertible preferred stock outstanding. Each of these 7,000 shares is paid a dividend of $6 per year. Each share can be converted into six shares of common stock. Answer is complete but not entirely correct. Earnings Per Share $ $ (65,000) $(131,000) 60,000 • Stock warrants to buy 14,000 shares of Foreman are also outstanding. For $10, 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. • Foreman has convertible bonds payable that paid interest of $43,000 (after taxes) during the year. These bonds can be exchanged for 14,000 shares of common stock. Burks holds 20 percent of these bonds, which it bought at book value directly from Foreman. Basic Diluted $(116,000) 35,000 Compute basic and diluted EPS for Burks Company. (Round your intermediate percentage value and final answer to 2 decimal places.) 2.44 X 1.75 X
Transcribed Image Text:The following separate income statements are for Burks Company and its 80 percent-owned subsidiary, Foreman Company: Foreman $(326,000) 238,000 (28,000) 0 Revenues Expenses Gain on sale of equipment Equity earnings of subsidiary Net income Outstanding common shares Additional Information Burks $(426,000) 360,000 • Amortization expense resulting from Foreman's excess acquisition-date fair value is $38,000 per year. ● Burks has convertible preferred stock outstanding. Each of these 7,000 shares is paid a dividend of $6 per year. Each share can be converted into six shares of common stock. Answer is complete but not entirely correct. Earnings Per Share $ $ (65,000) $(131,000) 60,000 • Stock warrants to buy 14,000 shares of Foreman are also outstanding. For $10, 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. • Foreman has convertible bonds payable that paid interest of $43,000 (after taxes) during the year. These bonds can be exchanged for 14,000 shares of common stock. Burks holds 20 percent of these bonds, which it bought at book value directly from Foreman. Basic Diluted $(116,000) 35,000 Compute basic and diluted EPS for Burks Company. (Round your intermediate percentage value and final answer to 2 decimal places.) 2.44 X 1.75 X
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