The following info on employee stock options is available:

You are part of the management team at a Canadian public company and you are eligible for the employee stock option plan.

A few years ago you received an option to purchase the following # of shares: 900

The current price (per share) & the FMV on the date of exercise is: $36

The option requires that you pay the option price of (per share), when exercising the options: $29

FMV of the shares (per share) when the option was granted: $29

You believe the FV of the shares will increase and plan to sell these shares when they reach (per share): $42

Required: calculate the 1) amount of employment income you will be required to report and when you must report it as a result of exercising the option and buying & 2) the tax cost (ACB) going forward.