subsid- 46. Following are separate income statements for Austin, Inc., and its 8
ID: 2583519 • Letter: S
Question
subsid- 46. Following are separate income statements for Austin, Inc., and its 80 percent-owned iary, Rio Grande Corporation as well as a consolidated statement for the business combina- tion as a whole. Austin Rio Grande Consolidated $(700,000) $(500,000) (1,200,000) 700,000 400,000 100,000 (84,000) 300,000 70,000 195,000 Operating expenses.. Equity in earnings of Rio Grande Individual company net income . . .$(284,000) $(130,000) S (305,000) (21,000) $ (284,000) Consolidated net income... Noncontrolling interest in consolidated net income.... Consolidated net income attributable to Austin Additional Information Annual excess fair over book value amortization of $25,000 resulted from the acquisition. The parent applies the equity method to this investment Austin has 50,000 shares of common stock and 10,000 shares of preferred stock outstand- ing. Owners of the preferred stock are paid an annual dividend of $40,000, and each share can be exchanged for two shares of common stock. Rio Grande has 30,000 shares of common stock outstanding. The company also has 5,000 stock warrants outstanding. For $10, each warrant can be converted into a share of Rio Grande's common stock. Austin holds half of these warrants. The price of Rio Grande's common stock was $20 per share throughout the year . . Rio Grande also has convertible bonds, none of which Austin owned. During the current year, total interest expense (net of taxes) was $22,000. These bonds can be exchanged tor 10,000 shares of the subsidiary's common stock. Determine Austin's basic and diluted EPSExplanation / Answer
Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital equals to current assets.
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