Problem
Primus, Inc., owns all outstanding stock of Sonston, Inc. For the current year, Primus reports net income (exclusive of any investment income) of $576,000. Primus has 100,000 shares of common stock outstanding. Sonston reports net income of $176,000 for the period, with 40,000 shares of common stock outstanding. Sonston also has 10,000 stock warrants outstanding that allow the holder to acquire shares at $12.00 per share. The value of this stock was $24 per share throughout the year. Primus owns 3,000 of these warrants.
What amount should Primus report for diluted earnings per share?