In 2020, Pomeranz received 2,000 rights to purchase David ordinary shares at P110 per share. Four rights are required to purchase one share. Pomeranz exercised 1,000 rights at which time, each ordinary share is selling at P124. Subsequently, all the other rights are sold at P4.00 each. 1. What is the total cost of the investment acquired through the exercise of rights? a. P124,000 b. P110,000 c. P 31,000 d. P 27,500 2. How much is the total investment income arising from the stock rights? a. P7,500 b. P4,000 c. P3,500 d. P0
In 2020, Pomeranz received 2,000 rights to purchase David ordinary shares at P110 per share. Four rights are required to purchase one share. Pomeranz exercised 1,000 rights at which time, each ordinary share is selling at P124. Subsequently, all the other rights are sold at P4.00 each. 1. What is the total cost of the investment acquired through the exercise of rights? a. P124,000 b. P110,000 c. P 31,000 d. P 27,500 2. How much is the total investment income arising from the stock rights? a. P7,500 b. P4,000 c. P3,500 d. P0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Pomeranz Company holds ordinary shares of David, Inc The shares are designated as equity investments at fair value through other comprehensive income and were acquired as follows:
Lot A (August 16,2018) - 750 shares for P67,500
Lot B (July 1, 2019) - 1,250 shares for P118,750
The market values of the David, Inc ordinary shares are P92 per share on December 31, 2018 and P105 per share on December 31,2019.
In 2020, Pomeranz received 2,000 rights to purchase David ordinary shares at P110 per share. Four rights are required to purchase one share. Pomeranz exercised 1,000 rights at which time, each ordinary share is selling at P124. Subsequently, all the other rights are sold at P4.00 each.
1. What is the total cost of the investment acquired through the exercise of rights?
Lot A (August 16,2018) - 750 shares for P67,500
Lot B (July 1, 2019) - 1,250 shares for P118,750
The market values of the David, Inc ordinary shares are P92 per share on December 31, 2018 and P105 per share on December 31,2019.
In 2020, Pomeranz received 2,000 rights to purchase David ordinary shares at P110 per share. Four rights are required to purchase one share. Pomeranz exercised 1,000 rights at which time, each ordinary share is selling at P124. Subsequently, all the other rights are sold at P4.00 each.
1. What is the total cost of the investment acquired through the exercise of rights?
a. P124,000
b. P110,000
c. P 31,000
d. P 27,500
2. How much is the total investment income arising from the stock rights?
a. P7,500
b. P4,000
c. P3,500
d. P0
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