Valix Finacc vol 1 Problem 10-10

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 10-10

Requirement 1

                                            125 - 100

    Theoretical value  =  ---------------------  =  5.00 per right

                                                4 + 1

a. Stock rights (5/125 x 2,100,000)                                                         84,000

            Investment in equity securities                                                                        84,000

b. Investment in equity securities                                                       709,000

            Stock rights                                                                                                     84,000

            Cash (25,000/4 = 6,250 x 100)                                                                         625,000

Requirement 2

                                           125 - 100

    Theoretical value  =  ---------------------  =  6.25 per right

                                                 4

a. Stock rights (6.25/131.25 x 2,100,000)                                               100,000

            Investment in equity securities                                                                       100,000

b. Investment in equity securities                                                        725,000

            Stock rights                                                                                                   100,000

            Cash                                                                                                              625,000