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?

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?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 14RE

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Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

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