Hall, Inc., enters into a call option contract with Bennett Investment Co. on January 2, 2011. This contract gives Hall the option to purchase 1,000 shares of WSM stock at $100 per share. The option expires on April 30, 2011. WSM shares are trading at $100 per share on January 2, 2011, at which time Hall pays $100 for the call option.
Using the information above, assume that the price of the WSM shares has risen to $120 per share on March 31, 2011, and the Hall is preparing financial statements for the quarter ending March 31. As regards this option, Hall, Inc., would report which of the following?
A) A $20,000 realized gain
B) A $20,000 unrealized gain
C) A deferred gain of $19,900
D) Nothing would be reported in the financial statements or the notes thereto.

Question

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The Answer of Hall, Inc., enters into a call option contract with Bennett Investment Co. on January 2, 2011. This contract gives Hall the option to purchase 1,000 shares of WSM stock at $100 per share. The option expires on April 30, 2011. WSM shares are trading at $100 per share on January 2, 2011, at which time Hall pays $100 for the call option.
Using the information above, assume that the price of the WSM shares has risen to $120 per share on March 31, 2011, and the Hall is preparing financial statements for the quarter ending March 31. As regards this option, Hall, Inc., would report which of the following?
A) A $20,000 realized gain
B) A $20,000 unrealized gain
C) A deferred gain of $19,900
D) Nothing would be reported in the financial statements or the notes thereto.

Hall, Inc, Enters into a Call Option Contract with Bennett Investment