Question
A-9: Call option On March 1, 2022, Jensen Corp. purchased a call option on shares of YTV stock. The contract was for 100 shares at
A-9: Call option
On March 1, 2022, Jensen Corp. purchased a call option on shares of YTV stock. The contract was for 100 shares at a strike price of $90 per share, with an expiration date of May 31, 2022. The option contract premium was $50. On March 31, a market appraisal estimated the time value of the option to be $40. Jensen settled the option contract on May 10. Prices of YTV stock during the option period are provided below.
| March 1 | March 31 | May 10 | |
| Price of YTV stock: | $90 | $80 | $85 |
At what amount would Jensen report as the value of the call option in its March 31, 2022 balance sheet?
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Management Accounting Information for Decision-Making and Strategy Execution
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
6th Edition
137024975, 978-0137024971
