Question
On April 1, 2020, Gamma Corp. purchases a call option for $ 500, which gives Gamma the right to buy 1,000 shares of Delta Inc.
On April 1, 2020, Gamma Corp. purchases a call option for $ 500, which gives Gamma the right to buy 1,000 shares of Delta Inc. for $ 30 each until December 1, 2020. Delta Inc. shares are currently trading for $ 30. At June 30, 2020, the options are trading at $ 4,000 and Gamma prepare financial statements on This June 30, 2020. At December 1, 2020, the options expire with no value.
What entry (if any) Gamma will prepare to record this option on June 30, 2020
a) DerivativesFinancial Assets/Liabilities............................................... 4,000 Gain or Loss on Derivatives.......................................................... 4,000
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b.) DerivativesFinancial Assets/Liabilities............................................... 3,500 Gain or Loss on Derivatives.......................................................... 3,500
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c.) Other Comprehensive Loss..................................................................... 3,500 DerivativesFinancial Assets/Liabilities..................................... 3,500
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d.) no entry. |
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