P 10-9 [EPS] Computations (subsidiary preferred stock and warrants) Pit Corporations net income for 2011 consists of the following: Separate income $320,000 Income from Sim Corporation: 80% of Sims income to common $160,000 Less: Patent amortization (4,000) Less: Unrealized profits on equipment sold to Sim (10,000) Les s: 80% of unrealized profit on land purchased from Sim (16,000 ) 130,000 Net income $450,000 ADDITIONAL INFORMATION 1. Pit has 100,000 shares of common stock, and Sim has 50,000 shares of common and 10,000 shares of $10 cumulative, convertible, preferred stock outstanding throughout 2011. The preferred stock is convertible into 30,000 shares of Sim stock. Subsidiary Preferred Stock, Consolidated Earnings per Share, and Consolidated Income Taxation 363 2. Sim has warrants outstanding that permit their holders to purchase 10,000 shares of Sim Corporation common stock at $15 per share (average market price $20). 3. Sims reported net income for 2011 is $300,000, allocated $100,000 to preferred stockholders and $200,000 to common stockholders. 4. Pit owned 40,000 shares of Sim common stock throughout 2011.

REQUIRED: Compute Pit Corporations (and consolidated) basic and diluted EPS.