Question
Cougar, Inc. has two potentially dilutive securities. Income from continuing operations for calendar year 2020 is $(250,000), income from discontinued operations is $100,000 (net of
Cougar, Inc. has two potentially dilutive securities. Income from continuing operations for calendar year 2020 is $(250,000), income from discontinued operations is $100,000 (net of tax), and the weighted average common shares outstanding is 100,000 shares. Also outstanding during the year are $5,000,000 of 6% bonds convertible into 10,000 shares of common stock. The average market price of Cougar stock was $28 for the year. The tax rate is 40%.
1. Compute basic EPS, showing your calculation in full
2. Compute diluted EPS, showing and explaining your calculations in full.
3. In good form, prepare a partial income statement for Cougar, Inc., starting with income from continuing operations.
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