Mirasol Corporation Granted an Incentive Stock Option to Employee Josephine

question 2

Multiple Choice

Mirasol Corporation granted an incentive stock option to employee Josephine two years ago.The option price was $150 and the FMV of the Mirasol stock was also $150 on the grant date.The option allowed Josephine to purchase 160 shares of Mirasol stock.Josephine exercised the option this year when the stock's FMV was $250.Unless otherwise stated,assume Josephine is a qualifying employee.The results of the above transactions to Mirasol Corporation will be

• A)no compensation deduction.
• B)a compensation deduction of $16,000 on the grant date.
• C)an alternative minimum tax adjustment item of $16,000 on the exercise date.
• D)a compensation deduction of $16,000 on the exercise date.

---

Definitions:

Barbara Fredrickson

A renowned psychologist known for her research on positive emotions and their role in human happiness and social connections.

Positive Emotions

Feelings that are generally pleasant and promote well-being, happiness, and fulfillment, such as joy, love, and satisfaction.

Happy Mood

A state of well-being and contentment characterized by positive emotions, which can influence cognition and behavior.

Phineas Gage

An individual known in psychology and neuroscience for surviving a severe brain injury in the 19th century that dramatically changed his personality and behavior.