On January 2, 2020, Ayayai Company purchases a call option for $310 on Merchant common stock. The call option gives Ayayai the option to buy 1,090 shares of Merchant at a strike price of $49 per share. The market price of a Merchant share is $49 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $53 per share, and the time value of the option is $200. Prepare the journal entry to record the purchase of the call option on January 2, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 2, 2020 enter an account title to record the transaction on January 2, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction on January 2, 2020 enter a debit amount enter a credit amount Prepare the journal entries to recognize the change in the fair value of the call option as of March 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Mar. 31, 2020 enter an account title to record the time value change on March 31, 2020 enter a debit amount enter a credit amount enter an account title to record the time value change on March 31, 2020 enter a debit amount enter a credit amount (To record the time value change.) Mar. 31, 2020 enter an account title to record the change in intrinsic value on March 31, 2020 enter a debit amount enter a credit amount enter an account title to record the change in intrinsic value on March 31, 2020 enter a debit amount enter a credit amount (To record the change in intrinsic value.) What was the effect on net income of entering into the derivative transaction for the period January 2 to March 31, 2020? Unrealized Holding select between gain and loss GainLoss $enter a dollar amount of the Unrealized Holding gain or loss for the period January 2 to March 31, 2020

On January 2, 2020, Ayayai Company purchases a call option for $310 on Merchant common stock. The call option gives Ayayai the option to buy 1,090 shares of Merchant at a strike price of $49 per share. The market price of a Merchant share is $49 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $53 per share, and the time value of the option is $200. Prepare the journal entry to record the purchase of the call option on January 2, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 2, 2020 enter an account title to record the transaction on January 2, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction on January 2, 2020 enter a debit amount enter a credit amount Prepare the journal entries to recognize the change in the fair value of the call option as of March 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Mar. 31, 2020 enter an account title to record the time value change on March 31, 2020 enter a debit amount enter a credit amount enter an account title to record the time value change on March 31, 2020 enter a debit amount enter a credit amount (To record the time value change.) Mar. 31, 2020 enter an account title to record the change in intrinsic value on March 31, 2020 enter a debit amount enter a credit amount enter an account title to record the change in intrinsic value on March 31, 2020 enter a debit amount enter a credit amount (To record the change in intrinsic value.) What was the effect on net income of entering into the derivative transaction for the period January 2 to March 31, 2020? Unrealized Holding select between gain and loss GainLoss $enter a dollar amount of the Unrealized Holding gain or loss for the period January 2 to March 31, 2020

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

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 23E

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Question

Prepare the journal entry to record the purchase of the call option on January 2, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2, 2020	enter an account title to record the transaction on January 2, 2020	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on January 2, 2020	enter a debit amount	enter a credit amount

Prepare the journal entries to recognize the change in the fair value of the call option as of March 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Mar. 31, 2020	enter an account title to record the time value change on March 31, 2020	enter a debit amount	enter a credit amount
	enter an account title to record the time value change on March 31, 2020	enter a debit amount	enter a credit amount
	(To record the time value change.)
Mar. 31, 2020	enter an account title to record the change in intrinsic value on March 31, 2020	enter a debit amount	enter a credit amount
	enter an account title to record the change in intrinsic value on March 31, 2020	enter a debit amount	enter a credit amount
	(To record the change in intrinsic value.)

What was the effect on net income of entering into the derivative transaction for the period January 2 to March 31, 2020?

Unrealized Holding select between gain and loss GainLoss

$enter a dollar amount of the Unrealized Holding gain or loss for the period January 2 to March 31, 2020

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