Assume the Parent Owns 90% of the Subsidiary and Has

question 9

Multiple Choice

Assume the parent owns 90% of the subsidiary and has an adjusted internally generated net income of $100,000 and 5,000 shares of common stock outstanding.Also assume the parent has dilutive bonds outstanding that are convertible into 2,000 shares of common stock and the interest paid on these bonds was $4,000.What is the consolidated diluted earnings per share (DEPS) if the subsidiary data include: 3,000 shares of common stock, 150 shares of convertible bonds that are held by parent, 5 shares of common stock that are from convertible bonds outstanding by subsidiary and subsidiary diluted earnings per share of $ 6.88.

• A)​$ 20.80
• B)​$ 25.48
• C)​$ 18.25
• D)​$ 14.86

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Definitions:

Designated

Assigned or appointed for a specific purpose or position.

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A warranty made in words, either oral or written.

Express Warranty

A written guarantee provided by a seller about the quality or nature of a product, promising specific standards or conditions.

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A legal assumption in commerce that goods are reasonably fit for the general purpose for which they are sold, even if not expressly stated.