Question
On January 1, 2000 Batman Company acquired all of the common stock of Robin Company at book value. Batman accounts for its investment in Robin
On January 1, 2000 Batman Company acquired all of the common stock of Robin Company at book value. Batman accounts for its investment in Robin using the initial value method and Robin does not pay dividends on its common stock.
The Balance sheets of Batman and Robin on December 31, 2020 is listed below:
Batman | Robin | |
common stock $1 par | 1,000,000 | 20,000 |
preferred stock $10 par 4% | 10,000 | |
net income | 90,000 | 45,000 |
a) Determine the consolidated earnings per share of Batman Company. Robin's preferred stock in non-convertible.
b) The preferred stock is convertible into 5 shares of common stock of Robin Company. Determine the consolidated earnings per share of Robin Company.
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