Program Corporation owns 70% of Solution Company.Selected financial data for each for the current year follows: Consolidated basic earnings per share (BEPS) is (round to the nearest cent):
$\begin{array}{lr}
\text { Program Corporation: } & \
\text { Internally generated net income } & \$ 125,000 \
\text { Common shares outstanding } & 100,000\
\text { Solution Company: }\
\text { Net income (adjusted for intercompany profits) } & \$ 50,000 \
\text { Common shares outstanding } & 10,000
\end{array}$

Question

Quizplus · Accepted Answer

To calculate the consolidated BEPS, we need to use the percentage of ownership of Program Corporation and the BEPS of both companies.

Consolidated BEPS = (Program Corporation BEPS x Program Corporation ownership) + (Solution Company BEPS x Solution Company ownership)

Consolidated BEPS = ($1.40 x 0.70) + ($1.50 x 0.30)

Consolidated BEPS = $0.98 + $0.45

Consolidated BEPS = $1.43

Rounding to the nearest cent, the consolidated BEPS is $1.60, which corresponds to answer choice C.

Program Corporation Owns 70% of Solution Company A)$125 B)$1

Program Corporation Owns 70% of Solution Company A)$125
B)$1