Plymouth Company holds a 90% interest in Savannah, Inc., which was acquired in a previous year. As of the end of the current fiscal period, the following information is available:
Additional information:
$\bullet$The warrants to acquire Savannah stock were issued July 1 of the current year. Exercise price is $9; stock price is $12.
$\bullet$The warrants to acquire Plymouth stock were issued in a previous fiscal period. Exercise price is $12; stock price is $18.
$\bullet$Each share of convertible preferred can be converted into 5 shares of Savannah common stock. Plymouth owns 60% of the convertible preferred stock.
Required:
Compute consolidated basic and diluted earnings per share for the current year. Ignore any tax effects.

Question

Plymouth Company holds a 90% interest in Savannah, Inc., which was acquired in a previous year. As of the end of the current fiscal period, the following information is available:
  Additional information:
$\bullet$The warrants to acquire Savannah stock were issued July 1 of the current year. Exercise price is $9; stock price is $12.
$\bullet$The warrants to acquire Plymouth stock were issued in a previous fiscal period. Exercise price is $12; stock price is $18.
$\bullet$Each share of convertible preferred can be converted into 5 shares of Savannah common stock. Plymouth owns 60% of the convertible preferred stock.
Required:
Compute consolidated basic and diluted earnings per share for the current year. Ignore any tax effects.

Quizplus · Accepted Answer

The Answer of Plymouth Company holds a 90% interest in Savannah, Inc., which was acquired in a previous year. As of the end of the current fiscal period, the following information is available:
  Additional information:
$\bullet$The warrants to acquire Savannah stock were issued July 1 of the current year. Exercise price is $9; stock price is $12.
$\bullet$The warrants to acquire Plymouth stock were issued in a previous fiscal period. Exercise price is $12; stock price is $18.
$\bullet$Each share of convertible preferred can be converted into 5 shares of Savannah common stock. Plymouth owns 60% of the convertible preferred stock.
Required:
Compute consolidated basic and diluted earnings per share for the current year. Ignore any tax effects.

Plymouth Company Holds a 90% Interest in Savannah, Inc ∙\bullet∙ The Warrants to Acquire Savannah Stock Were Issued July 1

Plymouth Company Holds a 90% Interest in Savannah, Inc $\bullet$ The Warrants to Acquire Savannah Stock Were Issued July 1