Valix Finacc vol 1 Problem 10-11

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 10-11

1. Stock rights (10/100 x 3,000,000)                                                    300,000

            Investment in equity securities                                                                      300,000

2. Investment in equity securities                                                    1,425,000

            Stock rights (30,000/40,000 x 300,000)                                    225,000

            Cash (15,000 shares x 80)                                                                            1,200,000

3. Cash (6,000 x 10)                                                                             60,000

            Stock rights (6,000/40,000 x 300,000)                                                               45,000

            Gain on sale of rights                                                                                     15,000

4. Loss on stock rights (4,000/40,000 x 300,000)                                   30,000

            Stock rights                                                                                                     30,000

                                                                                                                                                Shares              Cost

    First acquisition (3,000,000 – 300,000)                                              40,000          2,700,000

    New acquisition                                                                             15,000          1,425,000

                                                                                                           55,000          4,125,000