Question

intermediate Accounting (AOC 615, 630) Assignment Gradebook ORION Exercise 128 Your answer is partially correct. Try oni 400 shares on price . The On August 18, 2019, a Cainvested cash by purchasing a call option option expires on January 31, 2010. The following data are available with respect to the call option Market Price of Time Value 5207 Date Crows Shares September 30, 2014 $55 per share December 31, 2019 $55 per share arwary 15, 2000 $54 per share Prepare the journal entries for Pina for the following dates. (a) (b) c) (d) Investment in call option on Counting Crows shares on August 15, September 30, 2019-na prepares financial statements. December 3, 2019-na prepares financial statements. January 15, 2020 na settles the call option on the Counting Crows

Answer 1

NO	Date	Account Titles and Explanation	Debit	Credit
a)	Aug, 15,2019	Call Option	$ 414
		Cash		$ 414
b)	Sep,30,2019	Call Option (460 shares * $(55-46) ) (see Note 1 )	$ 4,140
		Unrealized Holding Gain or loss - Income		$ 4,140
		(To record the change in intrinsic Value )
	Sep,30,2019	Unrealized Holding Gain or loss - Income ($414 -$207)	$ 207
		Call Option		$ 207
		(To record the time value change )
c)	Dec,31,2019	Unrealized Holding Gain or loss - Income (460 shares *(55-53))	$ 920
		Call Option		$ 920
		(To record the change in intrinsic Value )
	Dec,31,2019	Unrealized Holding Gain or loss - Income ($207-$ 75)	$ 132
		Call Option		$ 132
		(To record the time value change )
d)	Jan,15,2020	Call Option (460 shares * $(54-53))	$ 460
		Unrealized Holding Gain or loss - Income		$ 460
		(To record the change in intrinsic Value )
	Jan,15,2020	Unrealized Holding Gain or loss - Income ($ 75-$ 35)	$ 40
		Call Option		$ 40
		(To record the time value change )
	Jan,15,2020	Cash (460 Shares *(54-46 )+ $35)	$ 3,715
		Unrealized Holding Gain or loss - Income (Note 2 )	$ 3,301
		Call Option (Note 3 )		$ 3,715
		Gain on settlement of call option (3715+3301-3715)		$ 3,301
		(To record Settlement of Call Option )

Explanation 1 :
Note 1 :
Particular	per share($)
Market price per share on Sep 30,2019	$ 55
Less: Option price per share	$ 46
Intrinsic value per share	$ 9
SO, Unrealized holding gain = 460 shares * $ 9
Unrealized holding gain = $ 4,140

Note 2:

To calculate the unrealized holding gain or loss- income:

Unrealized holding gain or loss = (4140-207-920-132+460-40)

Unrealized holding gain or loss = $ 3,301

Note 3 :

To Calculate the Call Option :

Call Option = (414+4140-207-920-132+460-40)

Call Option = $ 3,715