Black company owned 50,000 ordinary shares which were purchased for P120 per share. During the year, the investee distributed 50,000 stock rights to the investor. The investor was entitled to buy one new share for P90 cash and two of these rights. Each share had a market value of P130 and each right had a market value of P20 on the date of issue. What amount should be debited to the investment account if the rights were not accounted for separately?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Black company owned 50,000 ordinary shares which were purchased for
P120 per share. During the year, the investee distributed 50,000 stock
rights to the investor. The investor was entitled to buy one new share for
P90 cash and two of these rights. Each share had a market value of P130
and each right had a market value of P20 on the date of issue. What
amount should be debited to the investment account if the rights were
not accounted for separately?
Transcribed Image Text:Black company owned 50,000 ordinary shares which were purchased for P120 per share. During the year, the investee distributed 50,000 stock rights to the investor. The investor was entitled to buy one new share for P90 cash and two of these rights. Each share had a market value of P130 and each right had a market value of P20 on the date of issue. What amount should be debited to the investment account if the rights were not accounted for separately?
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