FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
The following separate income statements are for Burks Company and its 80 percent–owned subsidiary, Foreman Company:
Burks | Foreman | ||||||
Revenues | $ | (422,000 | ) | $ | (322,000 | ) | |
Expenses | 373,000 | 236,000 | |||||
Gain on sale of equipment | 0 | (26,000 | ) | ||||
Equity earnings of subsidiary | (63,000 | ) | 0 | ||||
Net income | $ | (112,000 | ) | $ | (112,000 | ) | |
Outstanding common shares | 60,000 | 33,000 | |||||
Additional Information
- Amortization expense resulting from Foreman’s excess acquisition-date fair value is $36,000 per year.
- Burks has convertible
preferred stock outstanding. Each of these 6,000 shares is paid a dividend of $4 per year. Each share can be converted into four shares of common stock. - 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 $41,000 (after taxes) during the year. These bonds can be exchanged for 11,000 shares of common stock. Burks holds 15 percent of these bonds, which it bought at book value directly from Foreman.
Compute basic and diluted EPS for Burks Company. (Round your intermediate percentage value and final answer to 2 decimal places.)
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- Visnoarrow_forwardCompute for the non-controlling interest in Net Incomearrow_forwardPeat Company owns a 90% interest in Seaton Company. The consolidated income statement drafted by the controller of Peat Company appeared as follows: Peat Company and Subsidiary Consolidated Income Statement for Year Ended December 31, 2020 Sales Cost of Sales Operating Expense Consolidated Income $9,200,000 1,800,000 Less Noncontrolling Interest in Consolidated Income Controlling Interest in Consolidated Net Income 11,000,000 3,000,000 200,000 $2,800,000 During your audit you discover that intercompany sales transactions were not reflected in the controller's draft of the consolidated income statement. Information relating to intercompany sales and unrealized intercompany profit is as follows: $14,000,000 Cost Selling Price Unsold at Year-End 1/3 2/5 2019 Sales-Seaton to Peat $1,500,000 $1,800,000 2020 Sales-Peat to Seaton 900,000 1,400,000 Required: Prepare a corrected consolidated income statement for Peat Company and Seaton Company for the year ended December 31, 2020.arrow_forward
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