anity Corporation owned 50,000 shares of another Lonely Corporation. These 50,000 shares were originally purchased for 100 per share. The investee distributed 50,000 rights to Vanity Corporation. Vanity Corporation was entitled to buy one new share for 140 and five of these rights. Each share had a market value of 150 and each right had market value of 10 on the date of issuance. Vanity Corporation exercised all rights. The share rights are accounted for separately and measured initially at fair value. What total cost should be recorded for the new shares that are acquired by exercising the rights?
anity Corporation owned 50,000 shares of another Lonely Corporation. These 50,000 shares were originally purchased for 100 per share. The investee distributed 50,000 rights to Vanity Corporation. Vanity Corporation was entitled to buy one new share for 140 and five of these rights. Each share had a market value of 150 and each right had market value of 10 on the date of issuance. Vanity Corporation exercised all rights. The share rights are accounted for separately and measured initially at fair value. What total cost should be recorded for the new shares that are acquired by exercising the rights?
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 51P
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Vanity Corporation owned 50,000 shares of another Lonely Corporation. These 50,000 shares were originally purchased for 100 per share. The investee distributed 50,000 rights to Vanity Corporation. Vanity Corporation was entitled to buy one new share for 140 and five of these rights. Each share had a market value of 150 and each right had market value of 10 on the date of issuance. Vanity Corporation exercised all rights. The share rights are accounted for separately and measured initially at fair value. What total cost should be recorded for the new shares that are acquired by exercising the rights?
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