Compare the accounting for pension expenditure in a governmental fund with the accounting for pension expenses for governmental activities at the government-wide level.

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On December 1, 20X1 a company bought a call option costing $100,000 as a speculative investment. The call option gave the company the right to purchase 100,000 barrels of oil for $110 per barrel during April 20X2. As of December 31, 20X1 the call option had a value of $125,000. The company liquidated the call option on April 15, 20X2 in exchange for $175,000. Which of the following accurately describes GAAP accounting for this call option? bok Multiple Choice The realized gain applicable to the year ending December 31, 20X1 is $25,000. The realized gain recognized on April 15, 20X2 is $75,000. The unrealized gain recognized on April 15, 20X2 is $50,000. The call option will be reported on the December 31, 20X1 balance sheet at $125,000 and a $25,000 unrealized gain will be reported as a component of income from continuing operations for the year ending December 31, 20X1.

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Chapter 8, Problem 10Q

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Compare the accounting for pension expenditure in a governmental fund with the accounting for pension expenses for governmental activities at the government-wide level.

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On December 1, 20X1 a company bought a call option costing $100,000 as a speculative investment. The call option gave the company the right to purchase 100,000 barrels of oil for $110 per barrel during April 20X2. As of December 31, 20X1 the call option had a value of $125,000. The company liquidated the call option on April 15, 20X2 in exchange for $175,000. Which of the following accurately describes GAAP accounting for this call option? bok Multiple Choice The realized gain applicable to the year ending December 31, 20X1 is $25,000. The realized gain recognized on April 15, 20X2 is $75,000. The unrealized gain recognized on April 15, 20X2 is $50,000. The call option will be reported on the December 31, 20X1 balance sheet at $125,000 and a $25,000 unrealized gain will be reported as a component of income from continuing operations for the year ending December 31, 20X1.

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