Valix Finacc vol 1 Problem 14-17

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 14-17

   2008

Dec.  1   Call option                                                                              20,000

                        Cash                                                                                                      20,000

Dec. 31   Call option                                                                           380,000

                        Unrealized gain - call option                                                               380,000

                Fair value (200,000 x 2)                                                                                 400,000

                Payment for call option                                                                                20,000

                Increase                                                                                                       380,000

                                                                                           

   2009

June    1   Call option                                                                          200,000

                        Unrealized gain – call option                                                              200,000

                 Call option – 6/1/2009 (200,000 x P3)                                                          600,000

                 Call option – 12/31/2008                                                                            400,000

                 Increase in derivative asset                                                                        200,000

            1    Cash                                                                                  600,000

                        Call option                                                                                          600,000

            1    Purchases (200,000 x P28)                                                 5,600,000           

                        Cash                                                                                                  5,600,000           

            1    Unrealized gain – call option                                            600,000

                        Gain on call option                                                                             600,000