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Computing consolidated earnings per share (EPS) Assume the following facts about a parent and its...

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Accounting

Computing consolidated earnings per share (EPS)

Assume the following facts about a parent and its 80% owned subsidiary company:

parent

Subsidiary

Net Income $200,000

Common shares outstanding 40,000

Convertible preferred stock Dividends=$20,000

Convertible into 10,000 shares of common stock

Convertible bonds

$50,000

20,000(16,000=80% owned by parent)

Interest expense after tax=$8,000 convertible into 5,000 shares of common stock

Compute basic earnings per share

Compute diluted earnings per share

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