Rome Inc. acquired 50,000 ordinary shares of Egypt Company at P120 per share. On February 14, 2020, Rome Inc. received 50,000 stock rights entitling it to buy one new share at P90 for every two rights held. On February 14, 2020, the market value of each share is P130 while that of each right is P20. On March 1, 2020, all the stock rights were exercised. If share rights are accounted for separately, what is the total cost of the new investment in ordinary shares acquired?

Rome Inc. acquired 50,000 ordinary shares of Egypt Company at P120 per share. On February 14, 2020, Rome Inc. received 50,000 stock rights entitling it to buy one new share at P90 for every two rights held. On February 14, 2020, the market value of each share is P130 while that of each right is P20. On March 1, 2020, all the stock rights were exercised. If share rights are accounted for separately, what is the total cost of the new investment in ordinary shares acquired?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 10MC

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