E 10-10 [EPS] Consolidated EPS with unrealized profit from upstream and downstream sale Information about Magulang Corporation
Question:
E 10-10
[EPS] Consolidated EPS with unrealized profit from upstream and downstream sale Information about Magulang Corporation and its 90 percent-owned subsidiary, Sangay Corporation, at December 31, 2016, is summarized as follows:
Magulang Sangay Outstanding common stock, $10 par 15,000 shares 20,000 shares Warrants to acquire 1,000 comon stock shares at $20 per share (average market price at $25 per share) — 1,000 warrants During 2016, Magulang and Sangay reported net income of $150,000 and $80,000, respectively. Magulang’s net income included income from Sangay. There was an unrealized profit in Sangay’s inventory account of $10,000. On December 31, 2016, Sangay also sold equipment with a three-year remaining useful life and a book value of $25,000 for $30,000 to Magulang.
REQuIRED: Compute Magulang Corporation and Subsidiary’s basic and diluted EPS for 2016.
Step by Step Answer:
Advanced Accounting
ISBN: 9781292214597
13th Global Edition
Authors: Joseph H. Anthony, Bruce Bettinghaus, Floyd A. Beams, Kenneth Smith