FUNDAMENTALS OF ADVANCED ACCOUNTING >I
6th Edition
ISBN: 9781307007350
Author: Hoyle
Publisher: MCG/CREATE
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Chapter 6, Problem 46P
To determine
Determine basic and diluted EPS of Company A.
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Following are separate income statements for Austin, Inc., and its 80 percent–owned subsidiary, Rio Grande Corporation as well as a consolidated statement for the business combination as a whole.
Additional Information
• Annual excess fair over book value amortization of $25,000 resulted from the acquisition.
• The parent applies the equity method to this investment.
• Austin has 50,000 shares of common stock and 10,000 shares of preferred stock outstanding. Owners of the preferred stock are paid an annual dividend of $40,000, and each share can be exchanged for two shares of common stock.
• Rio Grande has 30,000 shares of common stock outstanding. The company also has 5,000 stock warrants outstanding. For $10, each warrant can be converted into a share of Rio Grande’s common stock. Austin holds half of these warrants. The price of Rio Grande’s common stock was $20 per share throughout the year.
• Rio Grande also has convertible bonds, none of which Austin owned. During the current…
The following separate income statements are for Burks Company and its 80 percent–owned subsidiary, Foreman Company:Additional Information• Amortization expense resulting from Foreman’s excess acquisition-date fair value is $40,000 per year.• Burks has convertible preferred stock outstanding. Each of these 8,000 shares is paid a dividend of $4 per year. Each share can be converted into four shares of common stock.• Stock warrants to buy 20,000 shares of Foreman are also outstanding. For $15, 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 $45,000 (after taxes) during the year. These bonds can be exchanged for 10,000 shares of common stock. Burks holds 10 percent of these bonds, which it bought at book value directly from Foreman.Compute basic and diluted EPS for Burks Company.
The following separate income statements are for Burks Company and its 80 percent–owned subsidiary, Foreman Company:
Burks
Foreman
Revenues
$
(400,000
)
$
(300,000
)
Expenses
290,000
225,000
Gain on sale of equipment
0
(15,000
)
Equity earnings of subsidiary
(52,000
)
0
Net income
$
(162,000
)
$
(90,000
)
Outstanding common shares
50,000
30,000
Additional Information
Amortization expense resulting from Foreman’s excess acquisition-date fair value is $25,000 per year.
Burks has convertible preferred stock outstanding. Each of these 5,000 shares is paid a dividend of $4 per year. Each share can be converted into four shares of common stock.
Stock warrants to buy 10,000 shares of Foreman are also outstanding. For $20, each warrant can be converted into a share of Foreman’s common stock. The fair value of this stock is $25 throughout the year. Burks owns none of these warrants.
Foreman has convertible bonds payable that…
Chapter 6 Solutions
FUNDAMENTALS OF ADVANCED ACCOUNTING >I
Ch. 6 - Prob. 1QCh. 6 - Prob. 2QCh. 6 - Prob. 3QCh. 6 - Prob. 4QCh. 6 - Prob. 5QCh. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - Prob. 10Q
Ch. 6 - Prob. 11QCh. 6 - How do noncontrolling interest balances affect the...Ch. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Prob. 17QCh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Bens man Corporation is computing EPS. One of its...Ch. 6 - Prob. 9PCh. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - On January 1, Coldwater Company has a net book...Ch. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - Prob. 26PCh. 6 - Prob. 27PCh. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Prob. 35PCh. 6 - Prob. 36PCh. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Prob. 43PCh. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 1DYSCh. 6 - Prob. 2DYSCh. 6 - Prob. 3DYS
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