Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Studying for a test, help with this question? I can't figure it out. Following are separate income statements for Austin, Inc., and its 80 percent-owned

Studying for a test, help with this question? I can't figure it out.

image text in transcribed

Following are separate income statements for Austin, Inc., and its 80 percent-owned subsidiary, Rio Grande Corporation as well as a consolidated statement for the business combination as a whole. Austin Rio GrandeConsolidated $(700,000) $(500,000) $(1,200,000) 300,000 70,000 Cost of goods sold Equity in earnings of Rio Grande Individual company net income . . _ _ _ . . . Consolidated net income. . _ _ _ . . ._ _ _. . Noncontrolling interest in consolidated 700,000 195,000 100,000 (84,000) . . (284,000) $(130,000) (305,000) (21,000) (284,000) Consolidated net income attributable to Austin Additional Information Annual excess fair over book value amortization of $25,000 resulted from the acquisition. The parent applies the equity method to this investment. .Austin has 50,000 shares of common stock and 10,000 shares of preferred stock outstanding. Owners of the preferred stock are paid an annual dividend of $40,000, and each share can be exchanged for two shares of common stock. Rio Grande has 30,000 shares of common stock outstanding. The company also has 5,000 stock warrants outstanding. For $10, each warrant can be converted into a share of Rio Grande's common stock. Austin holds half of these warrants. The price of Rio Grande's common stock was $20 per share throughout the year. Rio Grande also has convertible bonds, none of which Austin owned. During the current year, total interest expense (net of taxes) was $22,000. These bonds can be exchanged for 10,000 shares of the subsidiary's common stock. Determine Austin's basic and diluted EPS

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Accounting

Authors: Radebaugh

4th Edition

0471136646, 9780471136644

More Books

Students also viewed these Accounting questions