Temporai Company owned P50.000 ordinary shares. These 50000 shares were purchased for P120 per share. On August 30,2020, the investee dis fributed 50,000 stock rights to the investor. The investor was entitied to buy one new share for P90 cash and tw o of these rights. On August 30,2020, ecach share hasa market value of P130 and each right had a market vaue of P20. What totai cost should be recorded for the new shares that are acquired by exercising the rights?

Temporai Company owned P50.000 ordinary shares. These 50000 shares were purchased for P120 per share. On August 30,2020, the investee dis fributed 50,000 stock rights to the investor. The investor was entitied to buy one new share for P90 cash and tw o of these rights. On August 30,2020, ecach share hasa market value of P130 and each right had a market vaue of P20. What totai cost should be recorded for the new shares that are acquired by exercising the rights?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 12P

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