Pandy Corporation Owns a 90% Interest in Sakaj Corporation's Common

question 20

Essay

Pandy Corporation owns a 90% interest in Sakaj Corporation's common stock.Throughout 2014,Sakaj had 20,000 shares of common stock outstanding and Pandy had 50,000 shares of common stock outstanding.Sakaj's only dilutive security consists of 10,000 stock options,with an exercise price of $20 per share.The average price of Sakaj's stock is $50 per share in 2014.The options are exercisable for one share of Sakaj's common stock.Pandy's and Sakaj's separate net incomes for the year are $200,000 and $180,000,respectively.
Required:
Compute the amount of basic and diluted earnings per share for Pandy (Consolidated)and Sakaj Corporations.

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Definitions:

Depreciation

A method of allocating the cost of a tangible asset over its useful life.

Budgeted Cash Balance

The projected cash balance a company expects to have at the end of a period, based on forecasted inflows and outflows.

Cash Receipts

The collection of money, including cash, checks, and credit card payments, received by a business.

Cash Disbursements

Cash disbursements refer to the outflow of cash for expenses, including payments to suppliers, wages, and other operational costs.