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.
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
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