Consolidated EPS with unrealized profit from upstream sale
The income statements of Pin Corporation and its 80 percent owned subsidiary, Sal Corporation, for 2011 are as follows:
|
Pin |
Sal |
|
|
Sales |
$1,270,000 |
$ 740,000 |
|
Income from Sal (see note) |
13,920 |
— |
|
Cost of sales |
(700,000) |
(470,000) |
|
Expenses |
(462,000 ) |
(230,000 ) |
|
Income before taxes |
121,920 |
40,000 |
|
Provision for income taxes |
(41,453 ) |
(13,600 ) |
|
Net income |
$ 80,467 |
$ 26,400 |
Pin had 10,000 shares of common stock and 1,200 shares of $100 par, 10 percent cumulative preferred stock outstanding throughout 2011. Sal had 20,000 shares of common stock and warrants to purchase 5,000 shares of Sal common stock at $24 outstanding throughout 2011. The average market price of Sal common stock was $30 per share.
REQUIRED: Compute Pin’s (and consolidated) basic and diluted EPS.