On December 31, 2019, Kier Corporation purchased 30,000 shares of Lord Company's shares at P100 each. On December 31, 2019, Lord Company's shares are selling at P125 per share. On February 1, 2020, Kier received 30,000 rights entitling it to purchase at P130 per share one additional share of Lord for each 10 shares then held. On that date, Lord's shares were selling ex-rights at P145 and the rights were selling at P5.00. If the securities were classified by Kier as Trading Securities at the time of acquisition and assuming the entire share rights were sold at their prevailing market price of P5.00, what amount of gain on sale of share rights should Kier Corporation recognize? *

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On December 31, 2019, Kier Corporation purchased 30,000 shares of Lord
Company's shares at P100 each. On December 31, 2019, Lord Company's
shares are selling at P125 per share. On February 1, 2020, Kier received
30,000 rights entitling it to purchase at P130 per share one additional share
of Lord for each 10 shares then held. On that date, Lord's shares were
selling ex-rights at P145 and the rights were selling at P5.00. If the
securities were classified by Kier as Trading Securities at the time of
acquisition and assuming the entire share rights were sold at their
prevailing market price of P5.00, what amount of gain on sale of share
rights should Kier Corporation recognize? *
Your answer
Transcribed Image Text:On December 31, 2019, Kier Corporation purchased 30,000 shares of Lord Company's shares at P100 each. On December 31, 2019, Lord Company's shares are selling at P125 per share. On February 1, 2020, Kier received 30,000 rights entitling it to purchase at P130 per share one additional share of Lord for each 10 shares then held. On that date, Lord's shares were selling ex-rights at P145 and the rights were selling at P5.00. If the securities were classified by Kier as Trading Securities at the time of acquisition and assuming the entire share rights were sold at their prevailing market price of P5.00, what amount of gain on sale of share rights should Kier Corporation recognize? * Your answer
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