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Yaross Company acquires 200 shares of Quigby Co. stock at $80/share. The investment is designated...

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Finance

Yaross Company acquires 200 shares of Quigby Co. stock at $80/share. The investment is designated AFS. To protect its investment, at the same time Yaross acquires a put on the 200 shares of Quigby stock with an exercise price of $80 per share. For simplicity (and totally unrealistically), assume there is no time value/premium associated with the put; hence the "purchase price" of the put is zero. At the end of the first year (20X9), the price of the Quigby Co. stock has fallen to $70 per share. At the end of the second year (20Y0), the put is exercised at $80/share.

a.Record the purchase of the Quigby Co. stock and (if needed) the acquisition of the put.

b.Record the 12/31/X9 adjustment to the various carrying values.

c.Record the 12/31/Y0 exercise of the put.

d.What was the income impact during 20X9?

e.What was the income impact during 20Y0? (2 pts.)

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