Nakeeta 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 upon exercise of the share rights if the rights were not accounted for separately?
Nakeeta 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 upon exercise of the share rights if the rights were not accounted for separately?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
a.2,250,000
b.3,250,000
c.3,050,000
d.5,500,000
![Nakeeta 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 upon exercise of the share rights if the rights were not accounted for separately?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F925dba2e-5496-4bec-824d-e314c61db5bd%2Fefe1dfc8-471a-42fe-a10d-ab6897f3110b%2F85v1zit_processed.png&w=3840&q=75)
Transcribed Image Text:Nakeeta 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 upon exercise of the share rights if the rights were not accounted for separately?
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