How much is the asset in the first quarterly

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On 1 January 20x1, when Tiger Ltd's shares are traded at $5.00 per share, ABC Ltd pays $3,000 to purchase a 120-day call option written by DEF Ltd on 10,000 shares of Tiger Ltd at a strike price of $5.00 per share.

Problem 1. How much is the asset/liability and the gain/loss in the first quarterly financial statements of ABC Ltd and DEF Ltd if on 31 March 20x1, Tiger Ltd's shares are quoted at $4.00 per share and the call option premium is $1,000?

Reference no: EM133012233

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