Reference no: EM132832563
On January 1, 2021, XYZ Company purchased 200,000 shares at P80 per share to be classified as nontrading investments through other comprehensive income.
On March 16, 2021, the company received an equivalaent number of share rights to purchase 40,000 shares at P100 per share. The market prices are as follows: share of stock - P114: share rights - P6. The share rights had an expiration date of September 30, 2021.
Answer the following questions, as of March 16, 2021:
Problem 1. Amount to be reported as investment in share rights is
Option 1: P1,200,000
Option 2: P800,000
Option 3: P1,000,000
Option 4: P200,000
Problem 2. Total cost of the new investment if all the rights are exercised is
Option 1: P5,000,000
Option 2: P4,000,000
Option 3: P4,560,000
Option 4: P5,200,000