On January 1, 2022, Rosewood Corp. purchased a put option on shares of ICM stock. Terms of the contract were as follows: Number of shares: 100 • Strike price: $220 per share Expiration date: May 31, 2022 • Total cost of the option contract: $100 • Seller of the option contract: First Investment Bank On January 1, 2022, ICM stock was trading at $220 per share. The following additional information is known: • On March 31, 2022, the price of ICM stock was $210 per share. A market appraisal indicated that the time value of the option contract was $80. • On May 10, 2022, the price of ICM stock was $215 per share. A market appraisal indicated that the time value of the option contract was $70. On this date, Rosewood settled the option contract. Required: 1. Indicate any amounts that Rosewood Corp. would have included in its March 2022 quarterly financial statements related to the option contract.
On January 1, 2022, Rosewood Corp. purchased a put option on shares of ICM stock. Terms of the contract were as follows: Number of shares: 100 • Strike price: $220 per share Expiration date: May 31, 2022 • Total cost of the option contract: $100 • Seller of the option contract: First Investment Bank On January 1, 2022, ICM stock was trading at $220 per share. The following additional information is known: • On March 31, 2022, the price of ICM stock was $210 per share. A market appraisal indicated that the time value of the option contract was $80. • On May 10, 2022, the price of ICM stock was $215 per share. A market appraisal indicated that the time value of the option contract was $70. On this date, Rosewood settled the option contract. Required: 1. Indicate any amounts that Rosewood Corp. would have included in its March 2022 quarterly financial statements related to the option contract.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
36.
Subject : - Accounting
Transcribed Image Text:A-4: Put option
On January 1, 2022, Rosewood Corp. purchased a put option on shares of ICM stock. Terms of the contract were as follows:
Number of shares: 100
Strike price: $220 per share
Expiration date: May 31, 2022
• Total cost of the option contract: $100
• Seller of the option contract: First Investment Bank
On January 1, 2022, ICM stock was trading at $220 per share.
The following additional information is known:
• On March 31, 2022, the price of ICM stock was $210 per share. A market appraisal indicated that the time value of the option contract was $80.
• On May 10, 2022, the price of ICM stock was $215 per share. A market appraisal indicated that the time value of the option contract was $70. On this date, Rosewood settled the option contract.
Required:
1. Indicate any amounts that Rosewood Corp. would have included in its March 2022 quarterly financial statements related to the option contract.
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