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Pam Corporation owns 80 percent of Sun Corporation s outstanding common stock The 80 percent interest was acquired in 2016 at $40000 in excess of book value due to undervalued equipment

Pam Corporation owns 80 percent of Sun Corporation s outstanding common stock. The 80 percent interest was acquired in 2016 at $40,000 in excess of book value due to undervalued equipment with an eight-year remaining useful life. Outstanding securities of the two companies throughout 2017 and at December 31, 2017, are: Sun Corporation s net income is $50,000 for 2017, and Pam s net income consists of $70,000 separate income and $23,800 income from Sun. REQUIRED: 1. Compute consolidated basic and diluted earnings per share, assuming that the preferred stock is convertible into 4,000 shares of Sun Corporation s common stock. 2. Compute consolidated basic and diluted earnings per share, assuming that the preferred stock is convertible into 5,000 shares of Pam s common stock.

Apr 21 2020 View more View Less

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