Question
Assume that on January 1, year 1, XYZ Corp. issued 1,000 nonqualified stock options with an estimated value of $4 per option. Each option entitles
Assume that on January 1, year 1, XYZ Corp. issued 1,000 nonqualified stock options with an estimated value of $4 per option. Each option entitles the owner to purchase one share of XYZ stock for $14 a share (the per share price of XYZ stock on January 1, year 1, when the options were granted). The options vest 25 percent a year (on December 31) for four years (beginning with year 1). All 500 stock options that had vested to that point were exercised in year 3 when the XYZ stock was valued at $20 per share. No other options were exercised in year 3 or year 4.
Identify XYZs year 1, 2, 3, and 4 tax deductions and book-tax difference (identify as permanent and/or temporary) associated with the stock options under the following alternative scenarios: (Do not round any division. Round other intermediate computations to the nearest whole dollar amount. Input all amounts as positive values. Leave no answer blank. Enter zero if applicable.)
a. ASC 718 does not apply to the stock options.
b. ASC 718 applies to the stock options.
Complete the following table.
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The Logistics Audit Methods Organization And Practice
Authors: Piotr Buła, Bartosz Niedzielski
1st Edition
1032461268, 978-1032461267
