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What is the basic earnings per share for subsidiary company

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Reference no: EM132668963

Assume the following facts are about a parent and its 75% owned subsidiary company:

                                                       Parent                 Subsidiary

Net income                                        $200,000              $75,000

Common shares outstanding                   45,000                 30,000

(22,500 = 75% owned by parent)

Convertible Preferred StockDividends = $25,000 Convertible into 5,000 shares of common stock

Convertible Bonds Interest expense after tax = $5,000

Convertible into 4,000

shares of common stock

Problem 1: What is the basic earnings per share?

Select one:

A. $5.14

B. $5.69

C. $6.94

D. $4.44

Reference no: EM132668963

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