Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On 1 July 2019 Gerringong Ltd purchased the following instruments: 100 000 shares in Gerroa Ltd for a price of $5.00 per share. Brokerage costs

image text in transcribed

On 1 July 2019 Gerringong Ltd purchased the following instruments: 100 000 shares in Gerroa Ltd for a price of $5.00 per share. Brokerage costs on the purchase were $200. At 30 June 2020 the share price of Gerroa Ltd was $4.50. Gerringong has elected to classify the share investment at fair value through other comprehensive income. 20 000 call options in Kiama Ltd. These call options give Gerringong Ltd the right to purchase 20 000 shares in Kiama Ltd. The options were purchased for $0.50 each and had a fair value at 30 June 2020 of $0.65. The options were purchased for speculative purposes. There were no transaction costs. The net impact on profit of the above for the year ended 30 June 2020 is: Select one: a. a net credit of $3,000 O b. a net debit of $47,000 O C. a net debit of $47,200 x O d. a net debit of $200 Oe. a net credit of $2,800

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Definitive Guide To Blockchain For Accounting And Business

Authors: Saurav K. Dutta

1st Edition

1789738687, 9781789738681

More Books

Students also viewed these Accounting questions