Four years ago, Acnex Inc. granted Ms. Cardena an incentive stock option (ISO) to purchase 1,000 shares of Acnex stock at $44 per share. On date of grant, the market price was $42 per share. This year, Ms. Cardena exercised the ISO when the market price was $75 per share. Which of the following statements is true?
A. Ms. Cardena recognizes no ordinary income, and Acnex is allowed no deduction this year.
B. Ms. Cardena recognizes no ordinary income, but Acnex is allowed a $31,000 deduction this year.
C. Ms. Cardena recognizes $31,000 ordinary income, and Acnex is allowed a $31,000 deduction this year.
D. Ms. Cardena recognizes $31,000 ordinary income, but Acnex is allowed no deduction this year.
Answer: A
You might also like to view...
Foundations, Inc. produces and sells cosmetic products. Currently, the company is operating at 70% of its capacity. The sales price of its product is $30 per unit, and it incurs a full cost of $25 to produce each unit. Its yearly fixed manufacturing overhead amounts to $20,000. The company has received a one-time order for supplying 5,000 units at $26 per unit. This order can be executed within the excess production capacity and will not involve any additional fixed costs. To make this decision, the management of Foundations should use ________.
A) absorption costing as the decision is long-term in nature B) variable costing as the decision is short-term in nature C) absorption costing as the decision is short-term in nature D) variable costing as the decision is long-term in nature
How should Lindell respond to John's email?
A) He should send a reply immediately, explaining that the delay was unavoidable because of the weather. B) He should email the CEO of Hoseke Corporation to explain the situation and the weather delay. C) He should ask the head of the shipping department to reply to John and accept responsibility for the delay. D) He should offer to replace the machines free of charge. E) He should call John immediately to apologize for the late delivery.
Which of the following jobs can cause high levels of stress?
A) Jobs with great responsibility and little autonomy B) Jobs with little responsibility and little autonomy C) Jobs with great responsibility and great autonomy D) Jobs with little responsibility and great autonomy
Inflation is expected to increase steadily over the next 10 years, there is a positive maturity risk premium on both Treasury and corporate bonds, and the real risk-free rate of interest is expected to remain constant. Which of the following statements is CORRECT?
A. The yield on 10-year Treasury securities must exceed the yield on 7-year Treasury securities. B. The yield on any corporate bond must exceed the yields on all Treasury bonds. C. The yield on 7-year corporate bonds must exceed the yield on 10-year Treasury bonds. D. The stated conditions cannot all be true - they are internally inconsistent. E. The Treasury yield curve under the stated conditions would be humped rather than have a consistent positive or negative slope.