Ruby Corporation Grants Stock Options to Iris on February 1,2014

question 88

Essay

Ruby Corporation grants stock options to Iris on February 1,2014.The options do not have a readily ascertainable value.The option price is $100,and the FMV of the Ruby stock is also $100 on the grant date.The option allows Iris to purchase 200 shares of Ruby stock.Iris exercises the option on August 1,2015,when the stock's FMV is $150.Iris sells the stock on December 5,2016 for $400.Determine the amount and character (i.e.ordinary,LTCG or STCG)of income recognized by Iris and the deduction allowed Ruby Corporation in 2014,2015 and 2016 under the following assumptions:
a.The stock option is an incentive stock option.
b.The stock option is a nonqualified stock option.

Understand the concept and applications of operant conditioning.

Differentiate between operant and respondent behaviors.

Identify the types and effects of reinforcers in learning processes.

Comprehend the methodology and applications of shaping in behavior modification.

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Definitions:

Herfindahl Index

A measure of market concentration, calculated by summing the squares of the market shares of all firms in the industry.

Market Power

The ability of a firm or group of firms to influence the price or control the supply of a product or service in the market.

Herfindahl Index

A measure of market concentration used to evaluate the level of competition within an industry, calculated by summing the squares of each firm's market share.