Computing consolidated earnings per share (EPS)

Assume the following facts about a parent and its 75% owned subsidiary company:

	Parent	Subsidiary
Net income	$210,000	$49,000
Common shares outstanding	50,000	28,000 (21,000 = 75% owned by parent)
Convertible preferred stock	Dividends = $20,100 Convertible into 9,000 shares of common stock
Convertible bonds		Interest expense after tax = $7,100Convertible into 6,000 shares of common stock

a. Compute basic earnings per share

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b. Compute diluted earnings per share

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