Black company owned 50,000 ordinary shares which were purchased for P120 per share. During the year, the investee distributed 50,000 stock rights to the investor. The investor was entitled to buy one new share for P90 cash and two of these rights. Each share had a market value of P130 and each right had a market value of P20 on the date of issue. What amount should be debited to the investment account if the rights were not accounted for separately?

Black company owned 50,000 ordinary shares which were purchased for P120 per share. During the year, the investee distributed 50,000 stock rights to the investor. The investor was entitled to buy one new share for P90 cash and two of these rights. Each share had a market value of P130 and each right had a market value of P20 on the date of issue. What amount should be debited to the investment account if the rights were not accounted for separately?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 1MC

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Black company owned 50,000 ordinary shares which were purchased for P120 per share. During the year, the investee distributed 50,000 stock rights to the investor. The investor was entitled to buy one new share for P90 cash and two of these rights. Each share had a market value of P130 and each right had a market value of P20 on the date of issue. What amount should be debited to the investment account if the rights were not accounted for separately? Present solution in good accounting form
Nakeeta company owned 50,000 ordinary shares which were purchased for P120 per share. During the year, the investee distributed 50,000 stock rights to the investor. The investor was entitled to buy one new share for P90 cash and two of these rights. Each share had a market value of P130, and each right had a market value of P20 on the date of issue. What amount should be debited to the investment account upon exercise of the share rights if the rights were not accounted for separately? 2,250,000 3,250,000 3,050,000 5,500,000
Black company owned 50,000 ordinary shares which were purchased for P120 per share. During the year, theinvestee distributed 50,000 stock rights to the investor. The investor was entitled to buy one new share for P90 cash and two of these rights. Each share had a market value of P130 and each right had a market value of P20 on the date of issue. What amount should be debited to the investment account if the rights were not accounted for separately?
A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. On June 01, received a 50 percent stock dividend. Received stock rights permitting the purchase of one share at P60 for every four shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised 1,000 rights from the stock purchased March 20, and sold the remaining rights at P4 each and on December 28, sold 400 shares from the stock purchased March 20, at P75, less broker’s fee of P1,000. After September 1 receipt of stock rights, what is the remaining cost of the investment? After the exercise and sale of stock rights, what is the remaining balance of investment? Stock rights are accounted for separately and use the average method.
A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. On June 01, received a 50 percent stock dividend. Received stock rights permitting the purchase of one share at P60 for every four shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised 1,000 rights from the stock purchased March 20, and sold the remaining rights at P4 each and on December 28, sold 400 shares from the stock purchased March 20, at P75, less broker’s fee of P1,000. After receipt of stock dividends, what is the new cost of investment per share? Stock rights are accounted for separately and use the average method.
A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. On June 01, received a 50 percent stock dividend. Received stock rights permitting the purchase of one share at P60 for every four shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised 1,000 rights from the stock purchased March 20, and sold the remaining rights at P4 each and on December 28, sold 400 shares from the stock purchased March 20, at P75, less broker’s fee of P1,000. After September 1 receipt of stock rights, what is the remaining cost of the investment? Stock rights are accounted separately and use average method.
Aldous Corporation owned 50,000 ordinary shares held for trading. These 50,000 shares were purchased for P120 per share. During the year, the investee distributed 50,000 share rights to its investor. The investor was entitled to buy a one new share for P90 cash and two of these rights. Each share had a market value of P130 and each right had a market value of P20 on the date of issue. 15. What total cost should be recorded for the new shares that are acquired by exercising the rights? a. 2,250,000 c. 3,050,000 b. 3,250,000 d. 5,500,000
A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. Received stock rights permitting the purchase of one share at P70 for every five shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised all rights from the stock purchased March 20 before receiving 25% stock dividends on November 30. However, your client has received 300 preference shares instead of ordinary which your client agreed on. On this date, the market value of XYZ’s ordinary shares is P80 while P40 for its preference shares. The amount of investment in XYZ’s preference shares will be (round off % to 2 decimal places as well as your final answer and rights are accounted for separately.).
A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. Received stock rights permitting the purchase of one share at P70 for every five shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised all rights from the stock purchased March 20 which shall be accounted for separately. XYZ declared cash dividends of P100 per share by XYZ’s BOD to all shareholders however, your client has received ordinary shares of 300 when its fair value is P90. The carrying value of the investment at year-end will be (Rights are accounted for separately.)
A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. On June 01, received a 50 percent stock dividend. Received stock rights permitting the purchase of one share at P60 for every four shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised 1,000 rights from the stock purchased March 20, and sold the remaining rights at P4 each and on December 28, sold 400 shares from the stock purchased March 20, at P75, less broker’s fee of P1,000. After September 1 receipt of stock rights, what is the remaining cost of the investment?
A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. Received stock rights permitting the purchase of one share at P60 for every four shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised 1,000 rights from the stock purchased March 20. If stock rights are not accounted for separately, how much is the increase in investments on March 20?
A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. Received stock rights permitting the purchase of one share at P60 for every four shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised 500 rights from the stock purchased March 20. If stock rights are not accounted for separately, determine the carrying value of the investments if 1/3 of the total holdings was sold for P75 a share. Round off answer to 2-decimal places.