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This year, Rerike Corp. granted a nonqualified stock option to Fabia to buy 5,000 shares of Rerike stock for $20 for five years. At date

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This year, Rerike Corp. granted a nonqualified stock option to Fabia to buy 5,000 shares of Rerike stock for $20 for five years. At date of grant, Rerike stock was selling on Nasdaq for $19 per share. For financial statement purposes, Rerike recorded $16,500 compensation expense for the estimated value of the option. Five years after Rerike granted the option to Fabia, she exercised it on a day when Rerike stock was selling for $27 per share. Requirements: Determine the following (1) Taxable income recognized by Fabia in the year of the grant: (2) Taxable income recognized by Fabia in the year of exercise: (3) Rerike's tax deduction in year of exercise: (4) Effect of exercise on Rerike's book income in year of exercise: (5) Effect of exercise on Rerike's deferred tax asset or liability in year of exercise

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