For 2018 the book tax difference is favorable in the amount of 60000 References

For 2018 the book tax difference is favorable in the

This preview shows page 3 out of 3 pages.

company deducts the $60,000 bargain element in 2018, when the stock option is exercised. For 2018, the book-tax difference is favorable in the amount of$60,000. References Multiple Choice Difficulty: 3 Hard Learning Objective: 05-01 Identify those income and expense itemsthat cause a corporation's financial accounting net income to differfrom its taxable income.In January 2018, Khors Company issued nonqualified stock options to its CEO, Jenny Svaro. Because the company does not expect Ms. Svaro to leave thecompany, the options vest at the time they are granted with a total value of $50,000. In December of 2018, the company experienced a surge in its stock price,and Ms. Svaro exercises the options. The total bargain element at the time of exercise is $40,000. For 2018, what is the nature of the book-tax difference dueto the options exercised? References Multiple Choice Difficulty: 3 Hard Learning Objective: 05-01 Identify those income and expense items that cause a corporation's financial accounting net income to differ from its taxable income.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture