Final answer:
Earnings Per Share (EPS) for a parent company with a 100% owned subsidiary is calculated by subtracting the Equity in Income of the Subsidiary from the parent company's net income and dividing by the outstanding common shares. No dilutive securities are considered in this straightforward EPS calculation.
Step-by-step explanation:
The question provided relates to the calculation of Earnings Per Share (EPS) for a parent company that has a 100% owned subsidiary and where the parent company's net income includes the Equity in Income of the Subsidiary.
In such a case, to calculate the EPS, you need to take the parent company's net income, subtract the amount of net income from the subsidiary that is already included in the parent company's net income (since it's a 100% ownership, all subsidiary income is included in the parent's income), and then divide this adjusted net income by the number of common shares outstanding of the parent company. It's important to note that since there are no potentially dilutive securities, there is no need to adjust for things like options or convertible securities.
Stock ownership in a firm is represented by shares, and a company typically raises financial capital through an initial public offering (IPO). Investors receive returns on their investment in two forms: dividends and capital gains. Shareholders are the people who own the shares of stock in a firm.