Reference no: EM132769183

On February 1, 2019, JYD Company enters into a contract with San Miguel Corp. that gives JYD Company the right to sell, and San Miguel Corp. the obligation to buy the fair value of 2,000 shares of JYD 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 JYD Company exercises the right. The contract will be settled net in cash, however, if JYD 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 option asset should JYD Company recognize on February 1, 2019?

a. P8,000

b. None

c. P10,000

d. P5,000