The amount of gain (loss) taken to equity in respect of the put option for the year
Question:
The amount of gain (loss) taken to equity in respect of the put option for the year ended 31 December 20x5 was:
(a) $0
(b) Gain of $38,000
(c) Gain of $12,000
(d) Gain of $50,000
(e) None of the above Alpha Corporation had the following transactions in 20x5:
Transcribed Image Text:
Date 1 January 20x5 1 July 20x5 Transaction Bought 100,000 units of shares of Company X at the market price of $3.80 per share. Alpha Corporation classified the investment as FVOCI Purchased a put option, which gave it the right but not the obligation to sell 100,000 units of shares of Company X at a price of $4.50 which was the prevailing market price. Alpha paid a premium of $12,000 for the put option. The put option expired on 30 September 20x5. Alpha Corporation classified the put option as a fair value hedge of its investment in Company X. Hedge effectiveness was measured based on the ratio of the cumulative
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Related Book For
Advanced Financial Accounting An IFRS Standards Approach
ISBN: 9781285428765
4th Edition
Authors: Pearl Tan, Chu Yeong Lim, Ee Wen Kuah
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