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What amount should be reported in the december profit

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Reference no: EM132769026

On February 1, 2019, SC Company enters into a contract with San Miguel Corp. that gives SC Company the right to sell, and San Miguel Corp. the obligation to buy the fair value of 2,000 shares of SC Company's own ordinary share outstanding as of January 31, 2020 at a strike price of P196,000 (P98 per share) on January 31, 2020, if SC Company exercises the right. The contract will be settled net in cash, however, if SC Company does exercise the right, no payment will be made.

Below is pertinent relevant information:

                                     2/1/2019                  12/31/2019             1/31/2020

Market price per share          P100/share             P95/share             P95/share

Fair value of options              P10,000                    P8,000               P6,000

Problem 1: What amount should be reported in the December 31, 2019 profit or loss related to the above contract?

Group of answer choices

a. None

b. P6,000

c. P2,000

d. P8,000

Reference no: EM132769026

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