Mungo Ltd has entered into two contactsinvolving financial instruments as follows.On 1 July 2020, the company obtained250,000 shares in Barry Ltd as a long-terminvestment at a cost of $4 per share. The yearended market prices of Barry Ltd were $5.00on 30 June 2021 and $4.50 on 30 June 2022.The election is made.On 1 March 2021, the company acquired150,000 exchange trade call option in OZ Ltdat a cost of $4.00 per option. The optionshave an exercise price of $45.00 and matureon 20 October 2021. The options have a fairvalue to the holder of $5.50 each on 30 June2021 and $6.00 each on 20 October 2021when the options are exercised.RequiredPrepare the entries of Mungo Ltd for anyfinancial assets or financial liabilities thatarise in case a) and b) above.

The bond issuer, or the borrower who raised the funds, must record the bonds as a financial…

Mungo Ltd has entered into two contacts involving financial instruments as follows. On 1 July 2020, the company obtained 50,000 shares in Barry Ltd as a long-term vestment at a cost of $4 per share. The year ended market prices of Barry Ltd were $5.00 on 30 June 2021 and $4.50 on 30 June 2022. The election is made. On 1 March 2021, the company acquired 50,000 exchange trade call option in OZ Ltd t a cost of $4.00 per option. The options have an exercise price of $45.00 and mature on 20 October 2021. The options have a fair value to the holder of $5.50 each on 30 June 2021 and $6.00 each on 20 October 2021 when the options are exercised. Required Prepare the entries of Mungo Ltd for any financial assets or financial liabilities that arise in case a) and b) above.

Mungo Ltd has entered into two contacts involving financial instruments as follows. On 1 July 2020, the company obtained 50,000 shares in Barry Ltd as a long-term vestment at a cost of $4 per share. The year ended market prices of Barry Ltd were $5.00 on 30 June 2021 and $4.50 on 30 June 2022. The election is made. On 1 March 2021, the company acquired 50,000 exchange trade call option in OZ Ltd t a cost of $4.00 per option. The options have an exercise price of $45.00 and mature on 20 October 2021. The options have a fair value to the holder of $5.50 each on 30 June 2021 and $6.00 each on 20 October 2021 when the options are exercised. Required Prepare the entries of Mungo Ltd for any financial assets or financial liabilities that arise in case a) and b) above.

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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Question

Mungo Ltd has entered into two contacts
involving financial instruments as follows.
On 1 July 2020, the company obtained
250,000 shares in Barry Ltd as a long-term
investment at a cost of $4 per share. The year
ended market prices of Barry Ltd were $5.00
on 30 June 2021 and $4.50 on 30 June 2022.
The election is made.
On 1 March 2021, the company acquired
150,000 exchange trade call option in OZ Ltd
at a cost of $4.00 per option. The options
have an exercise price of $45.00 and mature
on 20 October 2021. The options have a fair
value to the holder of $5.50 each on 30 June
2021 and $6.00 each on 20 October 2021
when the options are exercised.
Required
Prepare the entries of Mungo Ltd for any
financial assets or financial liabilities that
arise in case a) and b) above.

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