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What option asset should sc company recognize on february

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Reference no: EM132769022

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 option asset should SC Company recognize on February 1, 2019?

Group of answer choices

a. None

b. P10,000

c. P5,000

d. P8,000

 

Reference no: EM132769022

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