Question
XYZ, enters into a call option contract with Betts Investment Co. on January 2, 2022. This contract gives XYZ the option to purchase 1,000 shares
XYZ, enters into a call option contract with
Betts Investment Co. on January 2, 2022. This contract gives XYZ the option to purchase 1,000 shares of Upmann stock at $100 per share. The option expires on April 30, 2022. Upmann shares are trading at $100 per share on January 2, 2022, at which time XYZ pays $400 for the call option. As of March 31, 2022, the price of the Upmann shares has risen to $130 per share, and the remaining time value of the option has dropped in value to $100. XYZ is preparing financial statements for the quarter ending March 31. As regards this option how much income should XYZ, Inc. report on its March 31 income statement (ignore tax)
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