During all of the fiscal year 2017, Alpha Corporation had outstanding 100,000 shares of $10 par common stock and 5,000 shares of noncumulative, $100 par value, 6% preferred stock. For 2017, Alpha Corporation had $230,000 net income, and dividends were paid only to preferred shareholders.
Use this information to determine how much Alpha Corporation should report for 2017 basic earnings (loss) per share for income (loss) from continuing operations.
Home Depot, Inc. (HD) had 1.70 billion shares of common stock outstanding in 2008, whereas Lowes Companies, Inc. (LOW) had 1.46 billion shares outstanding. Assuming Home Depot’s 2008 interest expense is $696 million, Lowes’ interest expense is $239 million, and a 36 percent tax rate for both firms, what is their break-even level of operating income (i.e., the level of EBIT where EPS is the same for both firms)?
On January 1, 2020, Allen Corporation purchased 30% of the 24,000 outstanding common shares of Towne Corporation at $15 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the year, Towne Corporation reported a net income of $19,200. Towne Corporation declared and paid cash dividends of $6,400 on December 30, 2020, to shareholders on record. As of December 31, 2020, common shares of Towne Corporation were trading at $20 per share.
Record the entries in 2020 assuming that Allen Corporation had significant influence over Towne Corporation.
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