Question

Poison Corporation holds 70 percent of Snake Company’s voting common shares but none of its preferred shares. Summary balance sheets for the companies on December 31, 20X1, are as follows:

	Poison Corporation					Snake Company
Assets
Cash		$	16,000				$	27,000
Accounts Receivable			38,000					48,000
Inventory			110,000					75,000
Buildings and Equipment			295,000					210,000
Less: Accumulated Depreciation			(132,000	)				(70,000	)
Investment in Snake Company			125,300
Total Assets		$	452,300				$	290,000
Liabilities and Owners’ Equity
Accounts Payable		$	78,300				$	51,000
Wages Payable			49,000
Preferred Stock			100,000					60,000
Common Stock ($10 par value)			120,000					100,000
Retained Earnings			105,000					79,000
Total Liabilities and Owners’ Equity		$	452,300				$	290,000

Neither of the preferred issues is convertible. Poison’s preferred pays a 9 percent annual dividend and Snake’s preferred pays a 10 percent dividend. Snake reported net income of $46,000 and paid a total of $23,000 of dividends in 20X1. Poison reported $61,000 of income from its separate operations and paid total dividends of $50,000 in 20X1.

Required:
Compute 20X1 consolidated EPS. Ignore any tax consequences. (Round your answer to 2 decimal places.)
  

Consolidated earnings per share

Answer 1

#ANSWER:

Basic Earnings Per Share = $ 6.67

STEP - BY - STEP EXPLANATION

Particulars		Amount
Operating income of amber corporation		$ 61,000
Net income of newtop company	$ 46,000
Less:Pref dividends	$ (6,000)
earnings available to newtop common shareholders		$ 40,000
Consolidaed net income		$ 101,000
Less:income to NCI		$ (12,000)
Income to coomon shareholdersof amber corporation		$ 89,000
Less:Preferred dividends of amber corporation		$ (9.000)
earnings available to common shareholders		$ 80,000
No of shares		$ 12,000
BEPS		$ 6.67