Pancino Corporation owns a 90% interest in Sakal Corporation's common stock.Throughout 2010, Sakal had 20,000 shares of common stock outstanding and Pancino had 50,000 shares of common stock outstanding.Sakal's only dilutive security consists of 2,500 stock options, with an exercise price of $20 per share.The average price of Sakal's stock is $50 per share in 2010.The options are exercisable for one share of Sakal's common stock.Pancino's and Sakal's separate net incomes for the year are $100,000 and $80,000, respectively.
Required:
Compute the amount of basic and diluted earnings per share for Pancino (Consolidated)and Sakal Corporations.

Question

Quizplus · Accepted Answer

The Answer of Pancino Corporation owns a 90% interest in Sakal Corporation's common stock.Throughout 2010, Sakal had 20,000 shares of common stock outstanding and Pancino had 50,000 shares of common stock outstanding.Sakal's only dilutive security consists of 2,500 stock options, with an exercise price of $20 per share.The average price of Sakal's stock is $50 per share in 2010.The options are exercisable for one share of Sakal's common stock.Pancino's and Sakal's separate net incomes for the year are $100,000 and $80,000, respectively.
Required:
Compute the amount of basic and diluted earnings per share for Pancino (Consolidated)and Sakal Corporations.

Pancino Corporation Owns a 90% Interest in Sakal Corporation's Common