Allman,Inc

question 18

Multiple Choice

Allman,Inc. ,enters into a call option contract with Betts Investment Co.on January 2,2014.This contract gives Allman the option to purchase 1,000 shares of Upmann stock at $100 per share.The option expires on April 30,2014.Upmann shares are trading at $100 per share on January 2,2014,at which time Allman pays $200 for the call option.
-Using the information above,the call option would be recorded in the accounts of Allman as

• A) an asset.
• B) a liability.
• C) a gain.
• D) would not be recorded in the accounts (memorandum entry only).

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Definitions:

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The process by which individuals think about and determine the difference between right and wrong, often guided by ethical principles.

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Characteristics or features that are observable and measurable in a physical body.

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