How much should be recorded as the total cost

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On December 20, 2018, Ball Corporation purchased 30,000 shares of Pencil Compaan shares at P100 each and classi?ed them as trading securities at the time of acquisition. On December 31, 2018, Pencil Company's shares are selling at P125 per share. On February 1, 2019, Ball received 30,000 rights entitling it to purchase at P130 per share one additional share of Pencil for each 10 shares then held. On that date, Pencil's shares had a market value of P145 and each right had a market value of 95.00 on the date of issue

Required:

Problem 1: How much should the share rights be recorded on February 1, if it is accounted for separately?

Problem 2: If all the rights are exercised, how much should be recorded as the total cost of the new investment through the exercise of share rights?

Reference no: EM132819387

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