User Account

All Pages

What was the effect on net income of entering

Assignment Help Accounting Basics
Reference no: EM132064045

Question - On January 2, 2014, Jones Company purchases a call option for $300 on Merchant common stock. The call option gives Jones the option to buy 1,000 shares of Merchant at a strike price of $50 per share. The market price of a Merchant share is $50 on January 2, 2014 (the intrinsic value is therefore $0). On March 31, 2014, the market price for Merchant stock is $53 per share, and the time value of the option is $200.

(a) Prepare the journal entry to record the purchase of the call option on January 2, 2014.

(b) Prepare the journal entries to recognize the change in the fair value of the call option as of March 31, 2014.

(c) What was the effect on net income of entering into the derivative transaction for the period January 2 to March 31, 2014?

Reference no: EM132064045

Questions Cloud

What are the implications of the cultural variables : What are the implications of the cultural variables for your communication with the team representative from each country in the face to face meeting?
Targeted asset purchases : Targeted asset purchases. Suppose that fed funds rate is above the target rate.
Discuss what you would assess in regard to a clients culture : The person you describe could be someone in your clinical setting, someone you have worked with in the past, or a theoretical client.
Calculated depreciation to the nearest month : The asset depreciates on a straight-line basis at the rate of $40 per month and depreciation is calculated to the nearest month (two entries required)
What was the effect on net income of entering : On March 31, 2014, the market price for Merchant stock is $53 per share, What was the effect on net income of entering into the derivative transaction
Was the communication experience effective : Provide one example of how you have experienced the theory in your life. Be specific and provide examples, rather than providing generalities.
Name at least one strategic management model : How might you incorporate information from this model to positively impact your career success?
Poor or ineffective leader : Can a leader who acts ethically in all of his or her actions be a poor or ineffective leader? Why or why not?
The environmental problem of water scarcity : Describe a basic environmental health intervention and explain how it might be applied at each level of influence.

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is her qualified student loan interest deduction

In 2010 sally morris, a single taxpayer, pays $3000 of interest on qualified student loans. What is her qualified student loan interest deduction in 2010

  What effect on income should be reported

When the market value had risen to $165,000. What effect on 2013 income should be reported by Goofy for the Crazy Co. shares

  Discuss narrative comparing three primary reporting models

narrative comparing the three primary reporting models

  Evaluating diluted earnings per share

The average market price of FGI's common stock was $15 during 2011. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2011.

  What is the cost to purchase a statement

If not, how would you obtain a copy of a statement pertinent to federal agencies? What is the cost to purchase a statement

  Finley company has its company headquarters based in

finley company has its company headquarters based in raleigh north carolina and has six individual retail stores spread

  The companys variable costs are 75 of the sales price per

the companys variable costs are 75 of the sales price per unit and their fix costs are 240000. if the company earned

  Prepare the entry to reflect the estimated loss

Gage suspects some inventory may have been shoplifted. Prepare the entry, if necessary, to reflect the estimated loss from any shoplifted items

  Financial analysis do you think the bank would give peter

Brief comments on the following: based on your financial analysis do you think the Bank would give Peter the loan

  Determining capital structure and dividend policy

Firms A and B are identical except for their level of debt and the interest rates they pay on debt. Each has $2 million in assets, $400,000 of EBIT, and has a 40% tax rate.

  Describes the effect of the sale on juan foods?

describes the effect of the sale on Juan Foods?

  How much is turnbull manufacturing total cost

Beginning work in process inventory $ 35,000 and Direct labor 180,000. How much is Turnbull Manufacturing's total cost of work in process for the year

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd