On April 1, 2020, Gamma Corp. purchases a call option for $ 500, which gives Gamma the
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Question:
On April 1, 2020, Gamma Corp. purchases a call option for $ 500, which gives Gamma the right to buy 1,000 shares of Delta Inc. for $ 30 each until December 1, 2020. Delta Inc. shares are currently trading for $ 30. At June 30, 2020, the options are trading at $ 4,800 and the shares at $ 32 each. At December 1, 2020, the options expire with no value.
- The intrinsic value of the option at April 1, 2020 is
- The time value of the option at April 1, 2020 is
- At June 30, 2020, Gamma’s quarter end, the adjusting entry would be
- At December 1, 2020, Gamma’s entry would be
Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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