Assume the following facts are about a parent and its 80% owned subsidiary company:

1. Compute Primary earnings per share

2. Compute diluted earnings per share.

Parent Subsidiary $40,000 20,000 (16,000 = 80% owned by parent) 1. Net income... 2. Common shares outstanding. 3. Convertible preferred stock $100,000 30,000 Dividends = $10,000 Convertible into 5,000 shares of common stock 4. Convertible bonds Interest expense after tax - $6,000 Convertible into 3,000 shares of common stock