What is the gain on sale of investment

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Question - On January 1, 2021, Pampanga Company purchased 50,000 shares of another entity for P3,600,000. On October 1, 2021, Pampanga received 50,000 stock rights from investee. Each right entitles the shareholder to acquire one share for P85. The market price of the investee's share was P100 immediately before the rights were issued and P90 immediately after the rights were issued. On December 1, 2021, Pampanga exercised all stock rights. On December 31, 2021, Pampanga sold 25,000 shares at P90 per share. The stock rights are not accounted for separately.

If the FIFO approach is used, what is the gain on sale of investment that should be recognized in 2021?

a. 700,000

b. 287,500

c. 125,000

d. 450,000

Reference no: EM133006666

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