Question

On March 4, Year 1, Evan Co. purchased 1,000 shares of LVC common stock at $80 per share. OnSeptember 26, Year 1, Evan received 1,000 stock rights to purchase an additional 1,000 shares at $90 pershare. The stock rights had an expiration date of February 1, Year 2. On September 30, Year 1, LVC'scommon stock had a market value, ex-rights, of $95 per share and the stock rights had a market value of $5each. What amount should Evan report on its September 30, Year 1, balance sheet for investment in stockrights?a. $4,000b. $5,000c. $10,000d. $15,0005000/(5k+95k) x 80,000=4000

Answer 1

Answer:

b. $5,000

Explanation:

September 26th

1,000 x 5 = 5,000 stock rights Investment

It receive 1,000 right at $5 dollars each the total is 5,000

This rights were detachable from the stocks, so they have a diferent account, they are independent from the common shares purchased on March 4th