Peter Corporation Owns 90% of the Common Stock of Subsidiary

question 16

Essay

Peter Corporation owns 90% of the common stock of Subsidiary Subway.The following data is available:
The preferred stock is cumulative and convertible.The annual preferred dividends are $10,000.
Required:
1.Subway's preferred stock is convertible into 12,000 shares of Subway's common stock.Peter and Subway do not have any other potentially dilutive securities outstanding.
a.What is Subway's basic EPS and diluted EPS?
b.What is consolidated basic EPS and diluted EPS?
2.Subway's preferred stock is convertible into 12,000 shares of Peter's common stock.Peter and Subway do not have any other potentially dilutive securities outstanding.What is consolidated basic EPS and diluted EPS?

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Definitions:

Criterion

A standard, rule, or test by which something can be judged or measured, often used in decision-making or evaluation processes.

Core Principles

Fundamental beliefs or values that serve as the foundation for behavior, decision-making, and actions within an organization or individual's life.

Professional Selling

The process and activities required to effectively develop, manage, enable, and execute a mutually beneficial, interpersonal exchange of goods and/or services for equitable value.

Break-Even Point

the point at which total costs and total revenue are equal, meaning a business is neither making a profit nor taking a loss, serving as a critical financial analysis metric.