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28 January, 08:29

1) Orange Inc. issued 20,000 nonqualified stock options valued at $40,000 (in total). The options vest over two years-half in 2018 (the year of issue) and half in 2019. One thousand options are exercised in 2019 with a bargain element on each option of $6. What is the 2019 book-tax difference associated with the stock options? A) $14,000 unfavorable. B) $24,000 favorable. C) $6,000 favorable. D) $24,000 unfavorable. E) None of the choices are correct.

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  1. 28 January, 10:30
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    A) $14,000 unfavorable

    Explanation:

    40000/2 = 20000

    = 20000 - (1000*6)

    = 14000 (U)
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