Question
(1) In 2020, Owl Co. had $900,000 net income with $100,000 declared common dividends, a 25% tax rate, and 200,000 common shares outstanding all year.
(1) In 2020, Owl Co. had $900,000 net income with $100,000 declared common dividends, a 25% tax rate, and 200,000 common shares outstanding all year. On April 30, 2020, Owl issued its only dilutive security, $2,000,000, 6%, 9-year bonds at par, convertible to 60,000 common shares. What is Owl's 2020dilutedearnings per share?
$4.08
$3.58
$3.81
$4.00
(2) On January 2, 2020, Owl Co. purchased a 25% interest in Fox Co. for $650,000. On this date, Fox's stockholders' equity was $2,000,000. The carrying amounts of Fox's identifiable net assets approximated their fair values, except for land whose fair value exceeded its carrying amount by $500,000. For 2020, Fox reported net income of $300,000 and declared dividends of $40,000. Owl accounts for this investment using the equity method. In its December 31, 2020 balance sheet, what amount should Owl report as investment in subsidiary?
$650,000
$725,000
$910,000
$715,000
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