Assume that on January 1, year 1, ABC Inc. Issued 7,550 stock options with an estimated value of $12 per option. Each option entitles the owner to purchase one share of ABC stock for $33 a share (the per share price of ABC stock on January 1, year 1, when the options were granted). The options vest at the end of the day on December 31, year 2. All 7,550 stock options were exercised In year 3 when the ABC stock was valued at S38 per share. Identify ABC's year 1, 2, and 3 tax deductions and book-tax differences (Indicate whether permanent and/or temporary) associated with the stock options under the following alternative scenarios: Required a. The stock options are Incentive stock options and ASC 718 applies to the options b. The stock options are nonqualified stock options and ASC 718 applies to the options. Complete the following table. (For all requirements, leave no answer blank. Enter zero If applicable.) Year 1 Year 2 Year 3 Book-Tax Diff Book-Tax Diff Book-Tax Diff Fav/Unfav Temp/Perm Fav/Unfav Temp/Perm Fav/Unfav Temp/Perm Under ASC 718 a. Incentive Stock Options Unfavorable Permanent Unfavorable Permanent b. Nonqualified Stock Options Unfavorable Temporary Unfavorable Temporary Favorable Temporary Unfavorable Permanent