Question: Please explain each option. On December 1, 2018 a company bought a call option costing $100,000 as a speculative investment. The call option gave the

Please explain each option.

On December 1, 2018 a company bought a call option costing $100,000 as a speculative investment. The call option gave the company the right to purchase 100,000 bushels of corn for $110 per bushel during April 2019. As of December 31, 2018 the call option had a value of $115,000. The company liquidated the call option on April 15, 2019 in exchange for $165,000. Which of the following accurately describes GAAP accounting for this call option?

A. The realized gain recognized on April 15, 2019 is $65,000.

B. The realized gain applicable to the year ending December 31, 2018 is $15,000.

C. The unrealized gain recognized on April 15, 2019 is $50,000.

D. The call option will be reported on the December 31, 2018 balance sheet at $115,000 and a $15,000 unrealized gain will be reported as a component of income from continuing operations for the year ending December 31, 2018.

Thanks

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