question archive Doc, a public limited company, has purchased inventory of 100,000

Doc, a public limited company, has purchased inventory of 100,000

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Doc, a public limited company, has purchased inventory of 100,000. The company has offered the supplier a choice of settlement alternatives. The alternatives are either receiving 1.000 shares of Doc six months after the purchase date (valued at P110,000 at the date of purchase) or receiving a cash payment equal to the fair value of 800 shares as of December 31, 20X4 (estimated value P90,000 at the date of purchase). What should be the accounting entry at the date of purchase of the inventory? a. Inventory P90,000, liability P90,000. b. Inventory P100,000, liability P100,000. c. Inventory P100,000, liability P110,000, intangible asset P10,000. d. Inventory P100,000, liability P90,000, equity P10,000. (Adapted) 9. In the tax jurisdiction of Mack, a public limited company, a tax deduction is allowed for the intrinsic value of the share options issued to employees. The company issued options on January 1, 20X4, worth P15 million to employees. They vest in three years. The share options' intrinsic value at December 31, 20X4, was P12 million. The tax rate in the jurisdiction is 30%. What is the tax effect of the above issue of share options at December 31, 20X4? a. P1.5 million benefit to income statement. b. P1.2 million benefit to income statement. C. P1.5 million benefit recognized in equity. d. P1.2 million benefit recognized in equity. (Adapted) 10. In the above problem, what would be the tax effect if the intrinsic value at December 31, 20X4, was P21 million? a. P2.1 million tax benefit to income. b. P2.1 million recognized in equity. C. P1.5 million tax benefit to income, P0.6 million recognized in equity. d. P1.5 million recognized in equity, P0.6 million tax benefit to income. (Adapted)

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