Earning Per Share
Basic and Diluted EPS Problems
1) Pancino Corporation owns a 90% interest in Sakal Corporation's common stock.
Throughout 2010, Sakal had 20,000 shares of common stock outstanding and Pancino had 50,000 shares of common stock outstanding. Sakal's only dilutive security consists of 2,500 stock options, with an exercise price of $20 per share. The average price of
Sakal's stock is $50 per share in 2010. The options are exercisable for one share of Sakal's common stock. Pancino's and Sakal's separate net incomes for the year are $100,000 and
$80,000, respectively.
Required:
Compute the amount of basic and diluted earnings per share for Pancino
(Consolidated) and Sakal Corporations.
2) Parker Corporation owns an 80% interest in Sample Corporation's common stock.
Throughout 2010, Sample had 10,000 shares of common stock outstanding and Parker had 100,000 shares of common stock outstanding. Sample's only dilutive security consists of $50,000 face amount of 8% bonds payable. Each $1,000 bond is convertible into 20 shares of Sample stock. Parker and Sample's separate incomes for the year are
$100,000 and $75,000, respectively. Assume a 34% flat income tax rate.
Required:
Compute the amount of basic and diluted earnings per share for Parker (Consolidated) and Sample Corporations.
3) Peter Corporation owns 90% of the common stock of Subsidiary Subway. The following data is available:
Peter
Subway
Net income for 2011
$150,000
$50,000
Preferred dividends for 2011
$10,000
Common dividends for 2011
$15,000
Number of common shares outstanding 200,000
20,000
10% Preferred Stock, $100 par
$100,000
The preferred stock is cumulative and convertible. The annual preferred dividends are
$10,000.
Required:
1. Subway's preferred stock is convertible into 12,000 shares of Subway's common stock.
1
Peter and Subway do not have any other potentially dilutive securities outstanding.
a. What is Subway's basic EPS and diluted EPS?
b. What is
1) Pancino Corporation owns a 90% interest in Sakal Corporation's common stock.
Throughout 2010, Sakal had 20,000 shares of common stock outstanding and Pancino had 50,000 shares of common stock outstanding. Sakal's only dilutive security consists of 2,500 stock options, with an exercise price of $20 per share. The average price of
Sakal's stock is $50 per share in 2010. The options are exercisable for one share of Sakal's common stock. Pancino's and Sakal's separate net incomes for the year are $100,000 and
$80,000, respectively.
Required:
Compute the amount of basic and diluted earnings per share for Pancino
(Consolidated) and Sakal Corporations.
2) Parker Corporation owns an 80% interest in Sample Corporation's common stock.
Throughout 2010, Sample had 10,000 shares of common stock outstanding and Parker had 100,000 shares of common stock outstanding. Sample's only dilutive security consists of $50,000 face amount of 8% bonds payable. Each $1,000 bond is convertible into 20 shares of Sample stock. Parker and Sample's separate incomes for the year are
$100,000 and $75,000, respectively. Assume a 34% flat income tax rate.
Required:
Compute the amount of basic and diluted earnings per share for Parker (Consolidated) and Sample Corporations.
3) Peter Corporation owns 90% of the common stock of Subsidiary Subway. The following data is available:
Peter
Subway
Net income for 2011
$150,000
$50,000
Preferred dividends for 2011
$10,000
Common dividends for 2011
$15,000
Number of common shares outstanding 200,000
20,000
10% Preferred Stock, $100 par
$100,000
The preferred stock is cumulative and convertible. The annual preferred dividends are
$10,000.
Required:
1. Subway's preferred stock is convertible into 12,000 shares of Subway's common stock.
1
Peter and Subway do not have any other potentially dilutive securities outstanding.
a. What is Subway's basic EPS and diluted EPS?
b. What is