In 2008, Mr Delgado Exercised an Option to Purchase 1,000

question 50

Multiple Choice

In 2008, Mr Delgado exercised an option to purchase 1,000 shares of his employer's stock for $29 per share when the market price was $65 per share. This year, Mr Delgado sold the stock for $80 per share. Which of the following statements is false?

• A) If the option was an ISO, Mr. Delgado recognized a $51,000 gain on sale.
• B) If the option was nonqualified, Mr. Delgado recognized a $15,000 gain on sale.
• C) If the option was an ISO, Mr. Delgado has a $36,000 AMT preference item this year.
• D) None of the above is false.

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Definitions:

Bonds Payable

Long-term liabilities representing borrowed funds that a company is obligated to repay to bondholders at a specified maturity date.

Financing Activities

Transactions related to raising capital and repaying investors, including issuing equity, debt, and paying dividends.

Cash Flows

The collective sum of cash flowing in and out of a company, which influences its liquidity.

Investing Sections

Refers to the part of the cash flow statement that shows the flow of cash related to investments in assets, securities, and other non-operational activities.