Reporting EPS: Discontinued Operations

Taft Corporation had after-tax income from continuing operations of $14.1 million for 2020. Taft also reported a $2.58 million after-tax loss on the disposal of its textile subsidiary. Taft uses a calendar-year reporting period. Taft's capital structure consists of the following.

• Preferred stock: 210,000 shares of $100 par, 8% cumulative nonconvertible preferred stock issued in 2020. No dividends were declared in the current year.
• Common stock: Outstanding January 1, 2020, 4,271,865 shares, $1 par. Dividends of $1.00 per share were declared and paid in 2020. On July 1, 2020, a three-for-one stock split was declared and the shares were issued.

Required

a. What type of capital structure does Taft have (simple or complex)?

AnswerSimple structureComplex structure

b. Compute relevant EPS amounts.

Note: Round earnings per share amounts to two decimal places.

	Income from Continuing Operations Available to Common Stockholders	Weighted Avg. Common Shares Outstanding	Per Share
AnswerBasic EPSDiluted EPS	Answer	Answer	Answer

	Net Income Available to Common Stockholders	Weighted Avg. Common Shares Outstanding	Per Share
AnswerBasic EPSDiluted EPS	Answer	Answer	Answer

c. Show the EPS presentation for financial reporting.

AnswerBasic EPSDiluted EPS

Income from continuing operations	Answer
Loss from discontinued operations, net of tax	Answer
Net income	Answer