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Exercise Chapter 4 Financial Instruments: Derivatives & Hedging   QUESTION   In October 2018, TLT Bhd decided to invest its idle cash in the shares of SGS Bhd. Therefore, on 1 November 2018, TLT purchased 200,000 shares of SGS at RM2.50 per share.  The investment was measured at fair value through profit or loss. On the same date, TLT purchased put option on 200,000 shares of SGS at a premium of RM0.06 per share. The put option had an exercise price of RM2.50. The expiry date was 30 April 2019.   The prices of the shares of STS and the put option were as follows:     Date   Price per unit  of share   Time value  per unit of put option 30 November 2018   RM2.35   RM0.04 31 December 2018   RM2.40   RM0.03     REQUIRED:   Prepare the journal entries on 1 November 2018, 30 November 2018 and 31 December 2018 with regard to the investment in shares of SGS and the purchase of put option in accordance with the fair value method.

Exercise Chapter 4 Financial Instruments: Derivatives & Hedging   QUESTION   In October 2018, TLT Bhd decided to invest its idle cash in the shares of SGS Bhd. Therefore, on 1 November 2018, TLT purchased 200,000 shares of SGS at RM2.50 per share.  The investment was measured at fair value through profit or loss. On the same date, TLT purchased put option on 200,000 shares of SGS at a premium of RM0.06 per share. The put option had an exercise price of RM2.50. The expiry date was 30 April 2019.   The prices of the shares of STS and the put option were as follows:     Date   Price per unit  of share   Time value  per unit of put option 30 November 2018   RM2.35   RM0.04 31 December 2018   RM2.40   RM0.03     REQUIRED:   Prepare the journal entries on 1 November 2018, 30 November 2018 and 31 December 2018 with regard to the investment in shares of SGS and the purchase of put option in accordance with the fair value method.

Intermediate Accounting: Reporting And Analysis
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
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 12MC: (Appendix 14.1)Pamlico Company has a 500,000, 15%, 3-year note dated January 1, 2019, payable to...
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Exercise Chapter 4 Financial Instruments: Derivatives & Hedging

 

QUESTION

 

In October 2018, TLT Bhd decided to invest its idle cash in the shares of SGS Bhd. Therefore, on 1 November 2018, TLT purchased 200,000 shares of SGS at RM2.50 per share.  The investment was measured at fair value through profit or loss. On the same date, TLT purchased put option on 200,000 shares of SGS at a premium of RM0.06 per share. The put option had an exercise price of RM2.50. The expiry date was 30 April 2019.

 

The prices of the shares of STS and the put option were as follows:

 

 

Date

 

Price per unit

 of share

 

Time value

 per unit of put option

30 November 2018

 

RM2.35

 

RM0.04

31 December 2018

 

RM2.40

 

RM0.03

 

 

REQUIRED:

 

Prepare the journal entries on 1 November 2018, 30 November 2018 and 31 December 2018 with regard to the investment in shares of SGS and the purchase of put option in accordance with the fair value method.

ВKAR 3033 Exercise Chapter 4 Financial Instruments: Derivatives & Hedging QUESTION In October 2018, TLT Bhd decided to invest its idle cash in the shares of SGS Bhd. Therefore, on 1 November 2018, TLT purchased 200,000 shares of SGS at RM2.50 per share. The investment was measured at fair value through profit or loss. On the same date, TLT purchased put option on 200,000 shares of SGS at a premium of RM0.06 per share. The put option had an exercise price of RM2.50. The expiry date was 30 April 2019. The prices of the shares of STS and the put option were as follows: Price per unit Time value Date of share per unit of put option 30 November 2018 RM2.35 RM0.04 31 December 2018 RM2.40 RM0.03 REQUIRED: Prepare the journal entries on 1 November 2018, 30 November 2018 and 31 December 2018 with regard to the investment in shares of SGS and the purchase of put option in accordance with the fair value method.
Transcribed Image Text:ВKAR 3033 Exercise Chapter 4 Financial Instruments: Derivatives & Hedging QUESTION In October 2018, TLT Bhd decided to invest its idle cash in the shares of SGS Bhd. Therefore, on 1 November 2018, TLT purchased 200,000 shares of SGS at RM2.50 per share. The investment was measured at fair value through profit or loss. On the same date, TLT purchased put option on 200,000 shares of SGS at a premium of RM0.06 per share. The put option had an exercise price of RM2.50. The expiry date was 30 April 2019. The prices of the shares of STS and the put option were as follows: Price per unit Time value Date of share per unit of put option 30 November 2018 RM2.35 RM0.04 31 December 2018 RM2.40 RM0.03 REQUIRED: Prepare the journal entries on 1 November 2018, 30 November 2018 and 31 December 2018 with regard to the investment in shares of SGS and the purchase of put option in accordance with the fair value method.
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