Indicate any amounts that Mills Corp. would have included in its March 2022 quarterly financial statements related to the option contract. Balance Sheet (current assets): Gain on settlement of call option S Income Statement (partial): Net gain (unrealized, NI) 2,000 2,000

Indicate any amounts that Mills Corp. would have included in its March 2022 quarterly financial statements related to the option contract. Balance Sheet (current assets): Gain on settlement of call option S Income Statement (partial): Net gain (unrealized, NI) 2,000 2,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On May 1, 2020, GAL Co. purchased a short-term P2,000,000 face value, 9% debt instruments for P1,860,000 including the accrued interest and classified it as a trading security. The debt instruments mature on January 1, 2023, and pay interest semi-annually on January 1 and July 1. On December 31, 2020, the fair market value of the instruments is 98%. On March 2, 2021, GAL Co. sold the trading security for P1,980,000. How much will be recognized as income on the 2020 income statement? a. P100,000 b. P120,000 c. P160,000 d. P280,000 e. answer not given