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Find what is the effect on the shareholders equity

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Problem 1: In May 2014, Spar Company made a dividend distribution of one right for each of its 24,000 ordinary shares outstanding. Each right was exercisable for the purchase of 1/10 of a share of Spar's P50 variable rate preference share at an exercise price of P80 per share. On March 15, 2015, none of the rights had been exercised and Spar redeemed them by paying each shareholder P10 per right. What is the effect on the shareholders' equity as a result of the redemption of share rights?

a. P 2,400 decrease         c. P 240,000 decrease
b. P 48,000 decrease       d. P 720,000 decrease

Reference no: EM132745404

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