Problem 16-11 (IAA) On July 1, 2021, Queen Company purchased for P2,400,000. 50,000 newly issued 6% cumulative P20 par value preference shares. Each preference share had one share warrant attached which entitled the holder to acquire at P15 one ordinary share of P10 par value for each two warrants held. The market price on this date of the preference share without warrant was P50 and the market price of the share warrant was P10. On December 1, 2021, all the share warrants wre sold for P700,000. 1. What amount should be recorded as cost of the investment in preference shares? a. 2,400,000 b. 2,000,000 с. 1,200,000 d. 1,000,000 2. What amount should be recognized as gain on sale of warrants? a. 300,000 b. 700,000 с. 400,000 d. 0.

Problem 16-11 (IAA) On July 1, 2021, Queen Company purchased for P2,400,000. 50,000 newly issued 6% cumulative P20 par value preference shares. Each preference share had one share warrant attached which entitled the holder to acquire at P15 one ordinary share of P10 par value for each two warrants held. The market price on this date of the preference share without warrant was P50 and the market price of the share warrant was P10. On December 1, 2021, all the share warrants wre sold for P700,000. 1. What amount should be recorded as cost of the investment in preference shares? a. 2,400,000 b. 2,000,000 с. 1,200,000 d. 1,000,000 2. What amount should be recognized as gain on sale of warrants? a. 300,000 b. 700,000 с. 400,000 d. 0.

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter13: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 23EX

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oblem 16-11 (IAA) On July 1, 2021, Queen Company purchased for P2,400,000. 50,000 newly issued 6% cumulative P20 par value preference shares. Each preference share had one share warrant attached which entitled the holder to acquire at P15 one ordinary share of P10 par value for each two warrants held. The market price on this date of the preference share without warrant was P50 and the market price of the share warrant was P10. On December 1, 2021, all the share warrants wre sold for P700,000. 1. What amount should be recorded as cost of the investment in preference shares? a. 2,400,000 b. 2,000,000 с. 1,200,000 d. 1,000,000 2. What amount should be recognized as gain on sale of warrants? a. 300,000 b. 700,000 с. 400,000 d. 0. Question Please provide an explanation to the answers. Thank you. fullscreenExpand Transcribed Image Text Problem 16-11 (IAA) On July 1, 2021, Queen Company purchased for P2,400,000. 50,000 newly issued 6% cumulative P20 par value…
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