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Business, 18.04.2020 00:43 ghst

The following separate income statements are for Burks Company and its 80 percent–owned subsidiary, Foreman Company:Burks ForemanRevenues $ (450,000) $ (350,000)Expenses 288,000 250,000Gain on sale of equipment 0 (40,000)Equity earnings of subsidiary (77,000) 0Net income $ (239,000) $ (140,000)Outstanding common shares 75,000 40,000Additional Information:Amortization expense resulting from Foreman’s excess acquisition-date fair value is $50,000 per year. Burks has convertible preferred stock outstanding. Each of these 14,000 shares is paid a dividend of $6 per year. Each share can be converted into six shares of common stock. Stock warrants to buy 20,000 shares of Foreman are also outstanding. For $20, each warrant can be converted into a share of Foreman’s common stock. The fair value of this stock is $25 throughout the year. Burks owns none of these warrants. Foreman has convertible bonds payable that paid interest of $55,000 (after taxes) during the year. These bonds can be exchanged for 14,000 shares of common stock. Burks holds 20 percent of these bonds, which it bought at book value directly from Foreman.
Required:1. Compute basic and dilute EPS for Burks.

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